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The Rise of the Participant Economy

David L. Sifry, Founder and CEO, Technorati, Inc.

Call it a growth spurt in the sophistication of markets: in the last two years your customer has become more informed and more connected than ever before. She’s in cahoots with other customers and those of the competition. On the global stage she’s talking back: publishing and syndicating her thoughts and interests and her experiences with your products. And she’s plugging into communities of like-minded customers with similar interests.

Nowhere is this trend moving faster than in the realm of what we call the World Live Web, or the universe of media produced by everyday folk, including blogs, vlogs, podcasts, Internet videos and movies, digital photos, and online games.

The growth of the blogosphere, for instance, from a mere 200,000 blogs just two years ago to more than fifty million today, is testimony to the rise of an ever more connected and vocal audience. “Consumer” is fast becoming the wrong word to describe this increasingly sophisticated and feisty relationship. Consumers once just sat there and consumed products and messages from brands, which were in near total control. How very 20th century that was, to be sure.

The first response of corporations to newly empowered audiences has been remarkably defensive. A Forbes magazine cover story screams: “Will bloggers destroy your business?” Marketers ring-up their PR advisers: “Our customers are talking! How do we control that?” Yet the real headlines ought to read: “Savvy customers are making companies smarter; millions are saved in R&D and advertising costs, speeding up time-to-market, and helping them to avoid costly mistakes.”

The relationship between brands and their customers is changing in profound ways, and I would argue that this is for the better. And the message for firms: stop fearing your customers and begin to embrace them. Here’s a few suggestions about how to do just that.

Listen

It’s a relic of a bygone era that we relegate listening to the company’s market research department. Today, customers are giving us clues 24/7. Bloggers write at the rate of nearly 70,000 posts an hour and about two new blogs are being created every second of the day. The least management can do is tune into what amounts to a giant gift from the marketplace. Services like Technorati can help create common understanding of your markets, provide insight to product development, and focus your company’s market leadership.

For instance, when Apple Computer introduced the MiniStore, which incurred the wrath of some bloggers, to iTunes earlier this year, Apple paid attention. The MiniStore essentially watched what you were listening to and made product recommendations—and some folks questioned if this was a privacy invasion. Apple was clearly listening and within days made changes that improved the product well before the issue blew up and hit the nation’s newspapers and media.

Engage in Conversation

Online dialogue with customers seems frightening at first but is an effective way to build a more intimate relationship and a sense of community. This can be a tough shift for brands that are accustomed to funneling all messaging through official channels, such as PR people or press releases. When people from throughout an organization are empowered to reach out to all those they hope to serve, they invite a real two-way conversation and a powerful dialogue is opened up that helps the customer feel that they’re consulted, listened to, and valued.

For instance, Paramount Classics is working with Technorati to create “Big Tent” destinations as a way to invite open dialogue about their independent films. Starting with their recently distributed and highly acclaimed film “An Inconvenient Truth,” Paramount Classics created a unique new site, www.climatecrisis.net, wherein they not only presented their own regularly updated blog, but the voices of bloggers writing about the film, former vice president Al Gore, and the topic of global warming.

By linking in their own blog to the dialogue of many of the blog posts streaming through their site, the folks at Paramount invite and encourage reciprocal linking and commentary from these bloggers, creating that all-important virtuous circle that leads to increased search engine “juice,” increased visits to the brand’s site, and viral marketing of the product.

Amplify Your Customer’s Voice

The institution to really feel the first effect of the rise of the audience was the mainstream media. When bloggers uncovered inaccurate reporting at CBS and helped bring down the regime running the news operation, mainstream media looked at bloggers the way a lot of brands do: as a threat, as a problem, as an uninvited party-pooper upsetting the fundamental order of things.

But guess what: mainstream media has largely, and to their great credit, gotten over that and embraced the fact that their audience is smart and engaged, and is now part of the media product as a result. Venerable media institutions such as The Washington Post, Newsweek, The Associated Press, The Wall Street Journal and many others now include bloggers’ voices in their online editions. This, in turn, drives increased traffic and customer loyalty to these sites. By moving from anger to acceptance, mainstream media outlets have embraced their audience and created a sort of virtuous circle in which both parties benefit from the embrace of the other.

When the final epitaph of 2006 is written, it will no doubt include the fact that this year is the one in which brands awakened to the fact their audience is up to something. And enlightened brands realize this isn’t a threat, seeing the rise of the participant economy instead as an opportunity. To be more precise, this rise is only a threat if marketers fail to embrace their customers as strategic partners in ways that were never possible in the last century.

Treating customers as a peer at the table may seem antithetical to one hundred years of marketing practice developed in the eras of mass print, mass broadcasting, and mass advertising. Yet some pioneering brands are doing an excellent job of truly building a two-way relationship with the people—the real human beings—formerly known as their customers in this new communication era. You should, too. It’s not as scary as you might think. Welcome to the World Live Web.

© 2006 David L. Sifry. All rights reserved.

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