KSB-113 Chapter 11

Chapter 11: Social Media, Peer Production, and Web 2.0

11.1 Introduction

• Social media and peer production systems have seen an unexpected rise and impact. The average internet user spends over 2.5 hours on social media each day, resulting in significant wealth for founders, instant fame for some users, and reputational damage or benefits for businesses. Social media is now used by a wide variety of actors, from activists to entertainers.

• It is important to understand how these services differ from prior generation tools. Managers need to stay up-to-date with new channels and trends in social media. Most of the top 10 most-used apps are social and they are constantly growing, disrupting industries, and creating new ways to communicate.

• The major classifications of social media services include:

  • Social media - Creating, sharing, curating, and commenting on content.

  • Peer production - Users collaboratively create content, products, and services, including user-created services like Apple's AirTags, Skype, and BitTorrent.

  • Collaborative consumption - Participants share access to products and services rather than owning them. This can be managed by a central service provider like Zipcar or by a community that pools resources, like Airbnb and Uber.

• The chapter covers:

  • The technologies behind the social media/peer production movement with examples of their use and impact.

  • Prediction markets and crowdsourcing and their use in modern organisations.

  • How firms can organise themselves to take advantage of social media, specifically by creating a social media awareness and response team (SMART).

11.2 Blogs

• Blogs are online journals that are typically updated in reverse chronological order and often allow users to comment on posts.

  • WordPress powers over 30% of internet sites.

  • Substack, a platform that allows authors to offer both free and paid subscriptions, has over 2 million paying subscribers.

• Blogs are a long tail phenomenon, allowing a large selection of content to remain discoverable through search engines and social media.

• The benefits of blogging include:

  • Two-way dialogue with users through comments, which can be used for gathering opinions, brainstorming, and vetting ideas.

  • Keeping bloggers honest and accountable through public scrutiny of their content.

• Risks of blogging include:

  • Spam and negativity in the comments section.

  • Negative consequences for businesses due to poor responses to public criticism or disingenuous positive comments.

  • Difficulty in controlling employee blogging, which could lead to public postings that reflect negatively on the company.

  • Potential for employees to be fired for inappropriate posts.

• Key features of blogs include:

  • Immediate and unfiltered publication.

  • Ease of use.

  • Comment threads.

  • Reverse chronology of posts.

  • Persistence of posts.

  • Searchability.

  • Tags.

  • Trackbacks.

• Substack

  • Substack is a rapidly growing platform that allows authors to offer paid subscriptions for their content.

  • It has become popular among academics, journalists, and authors looking for more independence and control over their work.

  • Some argue it provides an unfiltered platform for hate speech and misinformation.

  • Substack has also launched a short-post competitor to X/Twitter called Notes.

• Key takeaways about blogs:

  • Blogs provide a fast way to distribute ideas and information.

  • They can build reputation and influence through search engines, social media sharing, and trackbacks.

  • They facilitate conversations and brainstorming through comment sections.

  • Well-known blogs can be influential and shape public opinion.

  • Businesses should engage with influential bloggers but avoid overly promotional or biased efforts.

  • Senior executives use blogs for various business purposes, including marketing and direct communication with consumers.

  • Blogs are a type of owned media and shared blog posts contribute to earned media for a company.

  • Effective blogs can improve a firm's SEO.

  • Substack is changing how writers and readers interact, enabling disintermediation of traditional media outlets.

11.3 Wikis

• A wiki is a website that can be edited by anyone with access, directly within a web browser. The name comes from the Hawaiian word for "quick", signifying their speed in collaborative content creation.

• Wikis are used for various purposes:

  • Shared knowledge repositories: Examples include Wikipedia, Wine Wiki, Brickipedia, and Wookieepedia.

  • Collaborative efforts: Meeting planning, project management.

  • Internal tools for organizational collaboration.

  • Knowledge management systems for sharing skills and preserving expertise.

• Wikipedia's relationship with AI is complex:

  • Wikipedia's vast database is vital for training AI models like ChatGPT and Google Gemini.

  • However, concerns exist that AI-generated summaries might overshadow and eventually replace Wikipedia as the primary source of information.

  • This could undermine Wikipedia's sustainability by reducing user traffic, which is crucial for keeping the site updated and accurate.

  • Wikipedia's terms of use require attribution, raising questions about AI models trained on Wikipedia data but failing to cite the source.

  • Wikipedia itself has been using AI tools since 2002 to moderate content, translate, correct grammar and spelling, and combat misinformation.

  • Experimental plugins aim to integrate Wikipedia data into AI models, ensuring accuracy and proper citations.

• Key features of wikis:

  • WYSIWYG editing for ease of use.

  • Version history and rollback capability for tracking and correcting errors or vandalism.

  • All changes are attributed for transparency.

  • Revision history is maintained for comparisons and rollbacks.

  • Automatic notifications for updates.

  • Searchable pages and organised tagging systems.

• Challenges and solutions for using wikis:

  • Jump-starting and maintaining active participation in wikis can be a challenge.

  • Wikimasters can help to manage and curate content, ensuring accuracy and relevance.

  • Larger, active wiki communities tend to be more accurate and self-correcting.

• Examples of wiki use in organisations:

  • Pixar: Improving meeting efficiency through agenda and material distribution.

  • Sony: Cross-functional collaboration on projects with secure access.

• Wikipedia's Influence:

  • Wikipedia is a dominant source of information online, impacting businesses and individuals alike.

  • Companies need to monitor their Wikipedia entries and manage their online reputation proactively.

  • Attempts to manipulate Wikipedia entries can backfire and damage a firm's reputation.

  • Wikipedia should not be cited as a primary source for research; users should seek original sources linked within entries.

• Key takeaways about wikis:

  • Wikis are powerful tools for collaborative content creation.

  • Larger wiki communities contribute to greater accuracy and value.

  • Wikis can be public or private, serving different purposes.

  • Free and low-cost wiki tools enable knowledge sharing and promote transparency within organisations.

11.4 Social Networks

• Social networks are online platforms that allow users to create profiles, share content, connect with others, and follow updates.

  • Popular social networks include Facebook, LinkedIn, Instagram, TikTok, and Pinterest.

  • Businesses are increasingly using social networks to reach their target audience.

• Examples of social network use:

  • Spotify Wrapped: A personalized and shareable recap of users' listening habits, generating massive free promotion for the platform.

  • IBM: Facilitating communication, expertise location, and virtual teamwork for a distributed workforce.

  • Sermo: A social network for physicians to share medical cases, receive peer feedback, and improve diagnoses.

  • PatientsLikeMe: Empowering patients with chronic illnesses to track their conditions, share experiences, and learn from others.

• Key takeaways about social networks:

  • Social networks are powerful communication and information sharing tools for individuals, groups, and corporations.

  • They raise privacy concerns due to the persistence of data and changing online behaviours.

  • Network effects and cultural factors contribute to the popularity of different social networks in different regions.

  • Information spreads rapidly and often uncontrollably on social networks.

11.5 X: The Death of Twitter or the Rise of a Super App?

• Elon Musk's acquisition of Twitter (now X) has led to significant changes and controversy:

  • Musk's self-proclaimed "free speech absolutism" has been questioned due to inconsistent policies on account bans and content moderation.

  • Attempts to block competitors like Mastodon and Substack highlight potential anti-competitive behaviour.

• Despite the controversy, X remains a powerful platform for:

  • Sharing time-sensitive information, as demonstrated by businesses like spas and food trucks using it to update customers.

• Key takeaways about X:

  • The future of X under Elon Musk's leadership is uncertain.

  • Musk's actions have raised questions about his commitment to free speech and fair competition.

  • X continues to be a valuable tool for businesses to communicate with customers.

11.6 TikTok: More Than Dance Videos?

• TikTok's AI-powered algorithm, focused on maximizing user engagement, contributes to its addictive nature.

  • The algorithm prioritizes "time spent" and "retention", tailoring content and ads based on user behaviour.

  • It analyzes various inputs like video content, music, text, hashtags, and user interactions to personalize recommendations.

  • This reliance on first-party data makes TikTok valuable to advertisers, especially as third-party cookies are being phased out.

• TikTok Shops:

  • Integrates shopping and fulfillment directly into the app, leveraging the platform's influence to drive purchases.

  • This poses a potential threat to e-commerce giants like Amazon.

  • Favoring U.S.-based sellers and locally shipped products enhances the shopping experience and might improve TikTok's reputation with U.S. authorities.

• Despite its popularity, TikTok faces scrutiny over:

  • Data security and potential access by the Chinese government.

  • Concerns about promoting harmful content and negatively impacting mental health.

  • Allegations of spreading misinformation.

• TikTok has taken steps to address these concerns by:

  • Routing U.S. data domestically through Oracle cloud infrastructure, though some backups remain in China.

  • Implementing tools for filtering offensive comments and encouraging users to reconsider potentially harmful posts.

  • Employing technology and human moderators to combat misinformation and partnering with fact-checking agencies.

• Key takeaways about TikTok:

  • Easy content creation tools and the AI-driven algorithm contribute to TikTok's widespread popularity.

  • TikTok Shops present a potential disruption to traditional e-commerce models.

  • The app continues to face challenges regarding data security, content moderation, and political scrutiny.

11.7 Prediction Markets and the Wisdom of Crowds

• The wisdom of crowds refers to the idea that a large, diverse group of people, often untrained amateurs, can collectively provide more accurate insights than a small group of experts.

• For a crowd to be "smart", it needs to be:

  • Diverse.

  • Decentralized.

  • Offer a collective verdict.

  • Independent in its opinions.

• Examples of the wisdom of crowds in action:

  • Wikipedia's accuracy compared to traditional encyclopedias.

  • Google's use of prediction markets for internal decision-making.

• Prediction markets leverage the wisdom of crowds to forecast future events, with varying degrees of accuracy.

  • Examples include the Iowa Electronic Markets, Farecast, the Hollywood Stock Exchange, and Nadex.

• Legal and ethical considerations of prediction markets include:

  • Potential for insider trading if employees use prediction market data for personal gain.

  • Unclear regulatory landscape surrounding prediction markets and potential classification as gambling.

• Crowdsourcing utilizes the collective intelligence of a community to solve problems or generate ideas.

  • Goldcorp successfully used crowdsourcing to identify gold deposits in its landholdings.

• Key takeaways about prediction markets and crowdsourcing:

  • The wisdom of crowds can be a powerful tool for problem-solving and decision-making.

  • Prediction markets and crowdsourcing platforms need to address ethical and legal considerations carefully.

11.8 Get SMART: The Social Media Awareness and Response Team

• Organisations need to be proactive and strategic in their approach to social media, which can be achieved by establishing a Social Media Awareness and Response Team (SMART).

• The key components of a social media policy should include:

  • Representation: Guidelines for employees on how to represent the firm online, including disclosure requirements.

  • Responsibility: Employees must be accountable for their online actions, adhere to confidentiality and security protocols, and maintain accuracy and transparency in their communications.

  • Respect: Maintaining respectful communication towards the firm, customers, and competitors.

  • Reputation: Emphasize the impact of online behaviour on the firm's and employee's reputation.

• Effective social media policies should:

  • Clearly outline expectations and consequences for violations.

  • Avoid micromanaging employees while promoting responsible use.

• Training is a crucial part of SMART:

  • Employees should be trained on social media basics, firm policies, security threats, and best practices.

  • The social media team should continuously update training materials based on new developments.

• Ethical Considerations:

  • Astroturfing and sock puppetry are unethical and potentially illegal practices.

    • Astroturfing involves creating fake grassroots support for a product or cause.

    • Sock puppetry is using fake online identities to promote one's own content or attack competitors.

  • These practices violate FTC rules and can damage a firm's reputation.

• Social Media Monitoring

  • Online reputation management is crucial for tracking and responding to online mentions of a firm, its brands, and its employees.

  • This involves monitoring various channels and analysing sentiment to identify potential threats or opportunities.

  • Monitoring can help to gather competitive intelligence, identify customer support issues, and uncover areas for improvement.

  • Tools for monitoring social media include Google Alerts, Bitly, X Search, Salesforce Radian6, HubSpot, and Hootsuite.

  • Firms should also monitor internal social media channels to understand employee sentiment and ensure appropriate use of company resources.

• Engaging and Responding on Social Media:

  • Social media can be used for outbound communication, drawing in communities, and mediating conversations.

  • Effective engagement strategies include:

    • Selectively retweeting positive comments to highlight customer appreciation and excellent service.

    • Offering apologies for negative experiences and addressing customer concerns.

    • Correcting misinformation and providing factual information.

    • Reaching out to key influencers for guidance, feedback, and spreading accurate information.

  • It's crucial to avoid engaging with trolls or responding to every mention.

• Crisis Management on Social Media:

  • Firms should prepare for potential crises by:

    • "War gaming" scenarios and establishing clear roles and responsibilities for the response team.

    • Empowering employees to report potential crises.

  • Silence during a crisis can be damaging, acknowledging the issue and outlining steps to address it are essential.

  • Leveraging online media beyond social platforms can be effective in countering negative information.

  • Responding to negative reviews on platforms like Yelp and Tripadvisor demonstrates a commitment to customer satisfaction.

  • Private responses might be more appropriate in situations involving reimbursements or sensitive information.

• Social Media Policy Implementation:

  • Social media policies should revolve around representation, responsibility, and respect.

  • Firms should provide training and update policies regularly based on emerging technologies and best practices.

  • Clear penalties for policy violations must be enforced.

  • Astroturfing and sock puppetry are unethical and can lead to legal consequences.

• Key takeaways on engaging and responding:

  • Effective social media engagement requires careful planning, execution, and crisis management strategies.

  • Observing and learning from the experiences of other firms can be valuable in navigating the evolving social media landscape.

This comprehensive overview of chapter 11 provides detailed insights into the various aspects of social media, peer production, and Web 2.0. By understanding the key concepts, opportunities, and risks associated with these technologies, businesses can develop effective strategies to leverage their power and mitigate potential downsides.