Social Network Markets

How Can We Use Social Commerce for Cinema? The audiovisual content industries are made up of a range of economic actors that produce a variety of media products for a number of markets. These actors, from individuals to companies to large clusters of companies working together, create content with target audiences in diverse socioeconomic situations, and will be discussed in the following.

The single mothers watching TV in unprivileged urban neighborhoods – to wealthy businessmen in first class intercontinental flights consuming iTunes movies on the newest iPads; in geographies as disperse as China, Brazil and Estonia. In formats intended for watching in one sitting or in a series of viewings throughout 20 years (the soap operas that cross generational chasms); with a variation in length from a few seconds to multiple hours; with revenue steams as different as Google Adwords, streaming licenses, tickets, downloads and product placements; with budgets from as low as €0 for a webcam-shot YouTube series on how to apply makeup to €500M in James Cameron’s transmedia IP Avatar that creates a fictional universe. My point is, the ACI are diverse in every sense of the word and their ability to make use of social network markets (SNM from here on) is – and will be – similarly diverse. Based on their ability to define a market within the global network and attract viewers within that market.

ial networks that have previously remained inaccessible or have not been thought of as markets at all. Where piracy is concerned, these are “markets” where there’s a buyer but no one is selling: and this will be a crucial point that emerges from my argument – the seller needs to be present where the consumer is to engage and attract the consumer into a transaction. While this may seem obvious, as is something street vendors do know, in the current online landscape this is often not the case. As Lessig puts it  “YouTube is a picture of unmet demand” (Remix: Making Art and Commerce Thrive in the Hybrid Economy, 2009).

In the following pages I will look at the challenges of SNM, focusing on Global Competition in Attention Economy and Decision-Fatigue; and on the opportunities side I will concentrate on Personalized Content Discovery (through content curation and recommendations) and Collaboration Between Producers – for knowledge transfer contributing to the creation of higher quality products and the exchange of expertise and insights to capture new markets within the networks.  For brevity, I will refer to selling movies (and any other type of media products) through SNM as Social Commerce. This name has become popular with entrepreneurs and venture capitalists in Silicon Valley in the forefront of building these new social platforms and engineering ways to engage audiences.

Challenges

Attention Economy and Decision Fatigue

From the point of view of ACI, such previously unprecedented direct access to markets and high resolution targeting mechanisms to communicate to individuals within that market, creates opportunities to disintermediate parts of the content production and distribution value chain that have been previously deemed crucial for successful product marketing. However sales are by no means easy, even though the ability to target and personalize a message is unprecedented. Hartley compares SNM to airport book markets: places where mere expertise in written form is not enough to sell a book to someone in the wealthy target group – the business traveler. Grabbing his or her attention in the first place – through publicity and fame – is crucial to making the sale: and thus to the dispersion of the valuable knowledge contained in the book. With a focus on educating the public, Hartley highlights the “importance of signaling in the propagation of public thought”. But the same idea applies to content that is frivolous or “mere” entertainment. “If you want to get an idea across, get attention” (Hartley, 2010).

In the attention economy, people under pressure from information overload and exceeding amounts of content to consumer experience decision fatigue: it is tiring to make decision every second about the movie to watch and where to consume it. People do like to make decisions however they appreciate some guidance. Not unlike the Boss character in the Dilbert cartoon series given a choice between two options so he can feel in charge yet not overthink the choices. This is where content curation and recommendations can lead the consumer to make a decision (discussed in detail under opportunities).

Globalization standardizes culture through large corporations. Industrially produced high-budget blockbuster movies aim at a common denominator between all people to appeal to the largest possible audiences, as the movie needs to fill the cinema seats in every city. At the same time empirical evidence shows cultural identities rising up and reinforcing their identity against the “Hollywood movies” of cultural industries (Throsby, 2008). While the ability of social commerce to bring together a niche from consumers in geographically disparate locations is an opportunity for digital audiovisual goods that don’t need transportation, it is also a challenge. Finding a niche is time-consuming and the web is characterized by content overload in any imaginable niche. What can be a differentiator is production-value: high quality content receives attention. While social network markets are inherently global, traditional content licenses are restricted by content-owners based on national geography, which ignores the idea of a global niche and thus loses a market opportunity.

From the point of view of the filmmaker, there’s a requirement to know it all. Startup filmmakers need to be well versed in business models, digital distribution, marketing, psychology and other disciplines – which leaves less time to focus on the actual writing, shooting and editing of an audiovisual piece. The knowledge required making a film that finds and audience is not necessarily tied to film schools. A lot of information comes from websites and digital books, conversations with other filmmakers around the world, tweets and chats. University is not the access point to knowledge it once was but a facilitator in investing one’s time in the right information and with the right people. The benefit of going to a film school that has few ties to a profitable industry and a route to a working market may be reduced, as entrepreneurialism becomes a requirement in filmmaking when finding a niche for the movie in the global market. Less business-savvy filmmakers make trade-offs in their lifestyles, not having resources to start a family, not affording time to socialize with friends, as related to digital workers described by Gill (Technobohemians or the new Cybertariat, 2007).

Opportunities

Collaboration and Content Discovery

A movie is an emotional, experiential good. Filmmakers can start collaboration with the audiences well before the actual shooting of the film through blogging and conversations through platforms such as Twitter. They can continue through a fundraising community such as Kickstarter to create some traction towards the film and test the market expectations. Starting a conversation with the potential audience early means choices that may cost a lot in the filmmaking process but may have little interest to the audience may be avoided and a more strategic approach chosen. However, care must be taken to reveal not much as to ruin the movie for the audience and kill their interest in seeing it.

Content business models rely on windowing to focus marketing efforts on a specific channel for a limited time window. Each window is accompanied by a marketing campaign (sometimes paid for by a 3^rd party, such as the cinema chain where the theatrical release happens). The overall budget for marketing across windows may well be larger than the production budget of the media product itself. From the channel with the highest perceived value – the cinema release – to DVDs, pay TV, free TV, online streaming and downloads. Disney will even release an old movie across generational windows every 10-15 years to attract new young audiences (Anderson, 2004). However the whole idea of windowing (instead of a day and date release) goes counter to the psychology of the contemporary consumer. As consumers we want access to 1) what we want, 2) where we want it, and 3) when we want it. “Access is the mantra of the YouTube generation. Not necessarily free access. Access.” (Lessig, 2009).

Lessig worries we are moving towards a feudal system of copyright that restricts distribution to certain areas. Disintermediation enables content-producers to sell directly to an audience without a distributor through a platform such as iTunes, Amazon, Prescreen or Fandor. However, the question arises if a successful movie needs a marketing budget to match or exceed the production budget, how will the independent filmmaker come up with that capital? Or alternatively, if there’s a way to reach the target audiences without a large marketing spend.

For content owners the geography of the consumer does not matter if they believe a day and date release will reap increased profits in comparison with a windowing model; however as long as the working model focused on mass audiences is bringing in profits, there is little incentive to change it. “Many of our assumptions about popular taste are actually artifacts of poor supply-and-demand matching” (Anderson, 2004).If one can target very specific people with content that is highly relevant for them, perhaps they pay for it?

“[N]etworks create a liquid market at low volume” (Anderson, 2004). It doesn’t matter whether a customer is 10km or 10000km away. “We no longer need to find local audiences” (Anderson, 2004). If there’s someone in Australia interested in seeing an Estonian ski movie (perhaps a group of 12 people coming for a vacation in Northern Europe), how can content industries take their silos of content and connect people across the planet with content in a fashion that is relevant (individual and personalized) to such a degree that they would pay for it? Even at a low number of sales to Australia, there’s not marginal cost to having the Estonian movie available: the cost is in meeting the Australian audience where they are looking for content about Estonia on social networks but without human involvement (that is expensive) but using algorithms. Because the niche is global, marketers can “aggregate disperse audiences” (Anderson, 2004) that are similar in their movie-taste: the same ski movie could be of interest for a group of Canadians coming to ski in Estonia just as well – and together with the Australian group they form a small niche market.

Curation and Recommendations

Content producers can make use of a number of ways of signaling that are fundamental to human psychology. These signals include Artificial Scarcity (exclusivity in time, space, group), Social Proof (endorsement by a famous person, endorsement by a large number of people = movement). An example of time scarcity is limited-time streaming. Prescreen is a Groupon for filmmakers, where a time limit is set for the purchase of a movie, with the expectation that if someone is interested in a product, pushing them to act will increase the likelihood of purchase. It remains to be seen whether this model works, as the company has not released sales data.

Curation is the act of selecting a number of products from a large product catalog and attaching the social proof of that value of the chooser – the tastemaker; and the platform, whether a magazine, a specialized movie website, or another platform, the key is choosing one that is 1) relevant to the audience and 2) recognizable and trustworthy. If the tastemaker is influential, this can affect the choice of a consumer who identifies with the curator. The curator need not necessarily be a national or international celebrity but he or she is a celebrity – someone with an esteemed taste – for his community, his group of followers.

People make important decisions based on aesthetics. This looks like fun; this looks boring. It is important to style content for the target audience. What’s the difference between a YouTube video and a Blockbuster movie? The blockbuster exhales the aesthetic of a product. For niche movies without mass-market appeal and a marketing budget to match, the way is differentiation. Filmmakers need to ask the question how to stand out? Attaching one’s film to a successful series or making it in the same niche as a popular success can help sales through recommendations. “[H]its still matter in attracting the customers in the first place” (Anderson, 2004). A movie without a marketing budget can elevate its presence through association with an existing product.

While there are sites like Letterboxd that allow one to interact with others who like the same film, these interactions have to lead to a central location that feels the most like home for the person. There’s a hierarchy to social networks, with some networks lurking on the edges of the online experience, and the person deciding whether they want to let their new friend closer to their inner circle, which is their central network. For the relationship to develop, that interaction needs to be longer term and more personal. The central network can vary for different people and is the one the person is most engaged with and allows for real-time interaction and an elevated feeling of co-presence on the site. The biggest network to date Facebook creates that experience of continued co-presence better than any other network. This is why interaction on Facebook feels more valuable than on a fringe network that the user is less active in.

Networks are conduits for buzz: the conversations about a media product. References to a single product add up an increase curiosity the more relevant the product is to the person. If the product is not a match, more references will become an annoyance and decrease the likelihood of a purchase. If one is inundated with mentions of the same film across channels, from friends, the news one reads and the movie is also in a genre one likes and has a catchy hook, one is more likely to give in to the social pressure and see the film. Where the investment is small – such as in short viral videos – the person may watch a video even if it’s not clearly relevant.

The value of a recommendation is based on its relevance to the person; it needs to correspond to the interests and tastes of the consumer; it needs to be backed up by social proof; it needs to be at an attractive price; and it needs to come at the right time. Getting all these details right is what makes a sale happen. From the point of view of the sellers, all these details need to be right for millions of people that each receive a personal experience: in other words, the system needs to scalable – meaning it needs to be built on machines and algorithms interpreting data from the social graphs and the interest graphs to figure out a response to the customer. For better access to such detailed information, releasing a single product for free can be valuable. “Free access is a means to gather extremely valuable data about the viewer. That data can translate into much more effective advertising techniques” (Lessig, 2009). Release a single movie in a series of films, such as the last episode of Matrix, may bring viewers for the first 2 episodes as the viewer becomes curious to understand what happened before – or doesn’t want to watch the series out of order and thus will purchase the first 2 episodes at a price. “[B]usinesses can then guide consumers further afield by following the contours of their likes and dislikes, easing their exploration of the unknown” (Anderson, 2004).

Conclusions

With 800M people on the largest social network out of the 2B Internet users, there are markets for online content that are larger than those found in a small European country, for example Estonia, with a national market where 2.1M ticket were sold for 49 cinemas (74 screens) in 2010 for a population of 1.3M people (Baltic Films). For online content creation, there’s 1) a higher requirement for filmmakers to understand human psychology in marketing their sales in global completion, and 2) high requirement for the ability to find lucrative niches in content consumption. As stated in the title, the social network markets are in evolution. Social networks as businesses themselves are in the business of finding new ways to connect people between themselves and people with businesses. Changes and improvements (and occasional problems) are expected to continue their evolution – but in any case, filmmakers must continue to find ways to be relevant for their audiences wherever they may be.

Benkler, Y. (2006). The Wealth of Networks: How Social Production Transforms Markets and Freedom. Yale University Press.