DIIA Blog

In 2006, Chris Anderson introduced the concept of the Long Tail. His soon-to-be released book will talk about the power of free. Will his theories stand up to the tough questions of Silicon Valley venture capitalist Guy Kawasaki?

[SXSWi 2010 will take place March 12-16. We need to get more higher ed sessions and panels in the mix--deadline for session proposals is this June.]

Kawasaki: With a book about “free,” context of the Long Tail, how does Twitter fit in?

Anderson: 2 banes of his existence–the questions 1) how I would use Twitter, and 2) the future of the NYT. Not the right time to maximize your ad revenue. The idea is now is how to make money. The media business model is to have 2 products: premium product and free product. Who’s going to pay for Twitter–ads or followers? Just being able to raise a company to visibility is of value. One model says it would take $250,000 from a single donor, or from members.

If you version your product, how do you price your premium, and how do you give value to your free product? MMOGs are the best test model–the World of Warcraft box and CD cost, but you can play free online.

Kawasaki: I have so many followers I can’t afford to leave Twitter, and expect them to follow me.

Anderson: How much stickiness do you have? Once you append a price, you quickly find out how loyal your fans are.

K: If you could reinvent Wired.com, what would you do differently?

A: Wired was launched in ‘93, and the very first question was “your magazine is about the digital world, why paper?” Some paper adds value to the internet. High production values–beautiful photography, premium content. That makes sense. Wired also has short form. Exists in multiple forms–paper and online. Books still matter.

K: Does that mean “free” won’t be “free?” You would be a hypocrite if you didn’t offer something for free.

A: hypothetical scenario by which a book could be free: audio book, abridged and unabridge, e-book (Kindle, iPhone reader, etc.). The digital forms, the marginal cost is close to zero, so should be free. Printing has larger costs, so should still have a price. If you believe if the physical book is the superior form, then a sample chapter or 2 (5%) free online.

K: asked his publisher to allow him to publish with a free pdf, publisher turned him down.

A: his publishers expect him to do what he wants, that’s how he began with them.

K: is it harder to achieve the popularity or to monetize the popularity?

A: wrong way to think about it. We’re each our own platform, we come up with our own ways to do it. Kawasaki has a company, then a following, then a Twitter following. Give readers something of value, then everyone will do it differently depending on the individual.

K: giving our books away will lead to more keynotes. Publishers may not get a cut of the keynotes.

A: key problem. Everyone says music industry is in collapse. Not so–only one portion–sales. More content, more licensing, more stuff. A disalignment. We need to align with the industry and go 360–artist rep, tour mgmt., see the world as the artist sees it. Books are similar. They are misaligned with the publishers, who just want to sell books. Do a 360 for books. As a speaker, consultant, equity stake in yourself.

Labels are bad managers, and publishers are bad speakers. Align the author with all the other ways to connect.

K: Twitter as a marketing weapon. You should do a thing where if you follow me (or you) we give you a free pdf–quid pro quo. Everybody gets something.

A: that would lock me into Twitter.

K: if I do it, it’s clever marketing, if someone does it to me, it’s spam.

A: why would I hold back the pdf for free, except for going through the one step of following him.

K: James Hega changed the music business. Apple exec who convinced the music publishers to sell iTunes for 99 cents.

K: what are some alternative models?

A: started the whole thing as an economic research model, became a semantic research model. The word “free” is fraught with. The old model: say you have a product for free–in reality, only part of it was free, charged for other parts. Then the last 10 years, everything gets cheaper over time. Anything online is near marginal cost line. Take the quotations of for 21st century. What are the models? Media business. Radio: how are we going to pay for it? Tax on vacuum tubes. 3rd party advertisers. 21st century, business model way beyond the media model. Software and services were free first. Freemium is the new version of the free sample. Give away %1 to sell 99%. Freemium is the opposite.

Starting with kid’s games, moving into Second Life, you’re seeing the model. 5% is the break-even line.

K: it’s hard to get 5% of any audience to pay.

A: don’t begin without the model, then change later. Begin your model with all of that up front. Means you have to differentiate between the two products–free and premium class for committed customer, and tailor to them.

K: what about China–no intellectual property rights.

A: an entire chapter on China. China is the future of greed. Also Brazil. Took decades to come to the decision that price = what the market will bear. In a competitive market, price falls to a marginal cost. Piracy is the animal influence of the Bertrand model. China can’t stop digital piracy. You don’t expect to make money from the CD, pirates will create leverage/celebrity, and you capitalize on that. Do commercial concerts, advertisements for product endorsement. Use piracy to create celebrity, celebrity to leverage cost.

K: what if Starbucks said, “this size coffee is free from now on.” Most people will upsell themselves, buy muffins, add caramel, chocolate.

A: Wall’s Drug–first real life model of that. Out of the way store, needed someway to get attention. Gave away free ice water, then people would buy something else. Can Starbuck’s do this? Absolutely. Companies give away free coffee, try to make you stay in the office. Would have to calibrate it. Don’t want a bunch of freeloaders to come and tie up the lines. Tony Hsieh of Zappo’s gives away shipping for free.

Two meanings: freedom, and price. In other languages, there are two separate words for the two meanings. Americans take adavantage of this dichotomy to sell products. It takes the risk out of experimentation.

K: why is 1 penny worth more than free? We sell things at $13.99 rather than $14.00 and people will buy.

A: there is a cognitive flag raised by ANY price, whereas free doesn’t raise that flag. Not about the money, it’s about the cognitive overload–”do I really want this?” A church offered free bus service to the elderly. Most of the tickets weren’t used, too many buses, not enough traveller. Then they charge a nickle. Suddenly people started using the tickets. If they value stuff they pay for, do they not value things they don’t pay for? Great deal of waste.

Apply to the digital world: waste is a good thing. No cost to wasting a Google search. No one thinks less of Google for being free. By age 5, children internalize economy. Now, in a digital economy, the model has changed. The point: does the premium product save you time or money in the long run? That’s where it gets it’s value.

K: is there any negative connotation to free?

A: can’t think of one. No excuse for sucking. If you do, we will take our attention and adulation elsewhere. Does anyone think less of Twitter being free? Utility is the best indicator. Which one suits my needs better? As you move on line, free wants to be the natural price. If you don’t take advantage, someone else will.

K: do you think people are more motivated by the fear of losing something they already have, or something they can’t get?

A: motivated by emotions: fear, regret, etc. Things you don’t have but want loom large. Traditional marketing is all about that. What they don’t do is followup–now that you have it, are you happy with it? Free says “this is what it is, try it out, if you like it, you can pay.” Lowers the risk. Then you don’t have to deal with lost, or “can’t have it.”

Is there a way out of the oppressive PowerPoint culture that surrounds us? Yes: skip the fonts and graphics talk, and explore how the human mind learns. When you accept what the research says about the brain, you’ll have no choice but to present a clear and compelling multimedia story.

Being a web worker in higher education has unique challenges: Shoestring budgets, campus politics, the generation gap between faculty and students, and serving disparate audiences. Come learn about the web in higher education — and what lessons the higher education web can teach the broader Web world.

U of W. Idea came from going to conferences, with a little packet of people from higher ed. Then there’s him. Wanted to get h.e. people together and talk about the issues we have now. #sxswed.

Comparing higher ed Webs to corporate world. Targeting–marketing recruitment. Should we be targeting high school seniors, or the outlying 45+. Budget cuts–as much as 20-30%. If your incoming class is that much bigger, does your budget go up? In Australia by 2011 or 12, the budget you get from the govt. will depend on how many students you attract. In higher ed, budget seems to be more set in stone. Whole collaborative nature of higher ed. Can usually throw something out on the Web or Twitter, and share issues, ideas, solutions. Don’t see that as much in the corporate world. Everyone is working on Web tools together and how to make them better.

5 basic difference in higher ed.
Worst of two worlds, downside of startup, downside of building corporation. Some universities are threatening to shut down the entire Web team (avert)!

The hierarchy: professors are wonderful people, highly specialized. None have a degree in the Web, and have incredible theories about health care, but don’t understand the Web.

Age gap: survey, 1 question. Do you think the course materials (syllabi, etc.) should be available on line? 2 of 3 students said yes, 2 of 3 faculty say no.

Little budgets means lots of small teams with no money. Lots of generalists, not a lot of specialists. Higher ed has trouble keeping the specialists. Want to find cheaper solutions, and gravitate more toward open sources. Corollary: women tend to be underrepresented all across the Web EXCEPT in higher ed. Why is that so? If you’re able to innovate a little bit, you get a massive return. Case Western University–Web redesign. 40% decrease in bounce rate just by redesigning their Web space.

Customer service: ivory tower is not very customer friendly. Where they’ve been able to be so, find big benefits. Surveyed students about the Web, open box, what are your issues? Surveyed on student services (admissions, etc.). Everyone hated their Web site, everyone loved their student affairs coordinator. Who was the person who created the Web site’s information? It was the person who was able to handle more students with more praise. She didn’t know anything about a Web site. Used Word, other non-best practices, couldn’t write for the Web. Should have been where she was most effective: 1 on 1 with students.

Don’t be afraid to take risks, especially if they’re cheap. Facebook, Twitter, pay someone to take care of those.

Many universities don’t think about when it gets really big–2000 questions/hour. How you allocate your resources will determine how successful you are.

Always be present. Do what it takes to say anytime, anywhere, how can we be the most helpful.

Question: difference in higher ed–people in the administrative versus academic area. Some cases where there is more of a budget when working with administrators rather than academics.

Some universities have marketing teams.

Redesign sites and bring into a CMS so that folks can handle it easier. Expectations of what it takes by far outstrip the actual work involved. Until 2002, UT Web was posted by ITS, who got it technically correct, but wasn’t an attractive draw for users.

Transition period in the UK, used to be primarily government funding, also a living expenses grant. Don’t do as many massive conferences as in the US. We are not alone, UK is suffering the same pain and misery.

Faculty is part of the development process. Brought up IITAP, suggested that people check out the program. Nice mix of faculty, designers, admin.

Put time and resources in for 6 months, make suggestions, then couldn’t close the sale. Find a champion, a hero for this change.

IT holding back, marketing/communications pushing. Where does the IT sit? In marketing? Both?

Does one Web team do front end, with a different team doing back end? How many do both? How many are you the only Web team?

Brand style guide for the Web. Concrete rules for developing Web size, from font size to color to writing for the Web.

Try to figure out solutions where things happen automatically. Has to be as easy and seamless as possible for your users. That’s what a lot of h.e. folks are trying to figure out.

Regarding faculty (go Keene!), many times they just don’t know what’s out there technologically. Sit down with them and show them what they might be able to do, to the point they can pick up the ball themselves. Younger, tenure track faculty are hurting when they find out that there’s no place for Web technologies, projects. It’s easy to be against something you’re afraid of, easy to be afraid of something you don’t understand. Needs to be that internal education.

Solutions: what’s our biggest problem right now? Money.

How can the Web make relationships more intimate, user-centered? Social media makes it possible for more people to communicate online. You get on those sites to meet, talk, learn, and share with other people. Build those connections through Web tools. If you see a potential student on Twitter, accommodate them when they actually visit.

One university has a degree that you can obtain solely in Second Life–Texas State Technical College in Waco. Good one!!

Another university using Facebook. Any others successful? How do you measure success with Facebook? At UCLA launched one with the Chancellor. He takes the time to answer personally–open forum. Have another general one. Can hold polls, gather data, have data like age, etc. Create the connection and have feedback back and forth. Survey incoming students–200 out of 350 kids use Second Life.

Walden University–internet based university. Use Facebook to recruit, faculty lecture series–use Facebook to advertise all their events. Do very little face to face, snail mail, everything is online. Facebook, Twitter, MySpace have become integral parts.

Alumni of DePauw. Started Facebook page last year, now have 3500 fans. Postings on Facebook showed that alumni really wanted the university to use e-mail, so it happened.

Canadian university–alumni posts events on Facebook, use spread to alumni all around the world.

Buzz on Facebook generates growth of event attendees: “Are you going to xxx? Yeah? Well I guess I will too.”

You can target updates to fans. Can target by age range, location, etc. to get alums or current students. USE PAGES!

Anyone using Facebook? Courses 2.0 in Facebook? Alumni Bridges?

Should h.e. go to larger e-mail clients like gmail? What are the consequences?

Universities have a hard time building and maintaining Web infrastructure. It’s astronomical what we’re charging each other, when it’s up to 85% cheaper off campus.

ASU and Boston College turned their e-mail services off and just forward to gmail.

Universities need to collaborate better within their organizations. Students eventually become alumni. Why not hand off to alumni? Maybe not that group, but a group that can maintain.

Web accessibility: UT–follows 508, except for media–remediate on request.

UH is going to have code review before it goes live. Should have an accessibility team.

Dear Glenda Sims pipes up–she’s the expert at UT: Who has enterprise tools that allow you to look across your whole site, validation, etc.? Hardly anyone. A good CRM will allow you to do this. IBM Rational Policy Tester (former WebXM, Bobbie) UT purchased one b/c it allowed us to find security issues, include accessibility and quality scan. SSNs, credit card numbers. World Place is a new site on Target. World Space may be more affordable. Do we like the IBM software? Glenda gets what she wants all about it. CSUN this Friday. Glenda says it requires alcohol (ahem!)

UCLA has a culture of sharing. Brilliant people hide in the departments. Have Web publisher groups to create community (UT has as well). How do you find them? Search your university name on Twitter. Office gossip.

IDEA: half day conferences on us, who we are, what we do, blog, Twitter, build and continue the conversations and add new hires when they come on. Furnish a community they can join right away.

The outsiders don’t know or trust the Web team. Needs to be overcome by communications–educating and informing. No one does that enough. Don’t tell people how things should be. Who has had success locally, and what have you learned? More of an open learning situation that can be very helpful–people doing the same thing.

Meet with people on a 1 to 1 basis. Universities are great for committees. Usually have a few who dominate, railroad. 1 on 1, feel more listened to, you have all the pieces of the puzzle, b/c you’ve been keeping up with all the suggestions.

How is the economy going to affect students/parents activity on the Web. 70% of incoming students say that they learn the most on their first visit, not from the Web sites.

How can we do better communicating on the Web? Student enrollment typically goes up in bad economy, better to get more education. Community college enrollments up. Some regions, cc.s are going way up, 4year going down. Dollar stretches further at cc’s.

What is the value of your institution’s degree? Prove the value of why you come to the institution, rather than heritage enrollment.

Are there things in your job you feel good about? Wish challenges were technical and not political. We love our jobs.

Is there a place we can continue this conversation? cuwebd.ning.com Meetup tweetup higher ed tonight at Buffalo Billiards.