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Four Rules of Web Economics

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An Excerpt from Overcoming the Digital Divide by Shelly Palmer and Mike Raffensperger

The Currency of the Web
One of the main goals of this book is to help you translate the value of your intellectual property into wealth. We are very used to translating the value of our intellectual property into cash. If someone pays you to do a job, you are translating the value of what you know how to do (your intellectual property) into cash, which in this case is a measure of wealth.

As easy as this is to do in the offline world, it is really tough to do online. It's relatively easy to create something of value online. AOL IM is very valuable, but it does not directly make any money for AOL. YouTube is very valuable, but if it were not owned by Google, it could not afford its bandwidth bill. There are literally millions of websites that will pirate music or video or help you code or create something, but they do not and cannot be used to directly translate their value into wealth.

This is where the other currencies of the web come in. Let's have a look at some of the most popular forms of online currency and see how we might use them to translate value into wealth.

1. Information
Information, specifically exclusive and filtered information, is a currency. Imagine a cab driver on West 38th Street in Midtown Manhattan driving aimlessly, looking for a fare. If he had a device in his cab that told him there was a fare waiting on 38th and Lex, he could almost immediately translate that information into cash. If several cabs had that information, it would be less valuable. If every cab had that information, it would simply be a business methodology with only commodity value. Any Wall Streeter will tell you that information (especially exclusive information) is cash. But a person living in the suburbs with knowledge of a sale at a local store can translate that information into cash just as easily.

The web is simply a giant pool of information. Information on pet grooming, the geopolitical climate of Uzbekistan, the phone number of your local deli, what your sister is doing this weekend — anything and everything. Many people create and monetize blogs solely on the basis of sharing and explaining specialized information. Connecting questions with answers is one of the web's specialties.

What information do you have that could translate into cash?

2. Attention
Attention is such an established currency, it's written into the grammar of the English language: you "pay" and "receive" attention. Any sitting president knows well the currency of attention. Using the bully pulpit, he can sway voters, move Congress to enact legislation or cow foreign powers to cease hostilities. Nearly the entire business model of broadcast television is built on attention; it packages the attention of its audience and sells it to sponsors.

But you need not be a master of the universe to translate attention into wealth. In 1995, Craig Newmark started a simple email list among friends, announcing social events of interest to software developers living in the San Francisco Bay area. Subscribers and the number of event postings grew rapidly. Local employers began posting available development jobs to the list, and soon Craig saw an explosive demand for additional categories and a web interface. You likely now know this website as craigslist.org. It's more than a success story. Take a few moments and Wiki it.

3. Trust Circles
In the digital age, each of us commands a sphere of influence, holding the ear of any number of people, our own personal circle of trust. There is someone reading this sentence right now who with a single email could drive dozens of people to a musical performance, restaurant opening, volleyball game, fashion sale, classic car show, art exhibit, civic protest or just about anything under the sun.

Whose attention do you command?

4. Intention
Sometimes it's not what you said, it's what you meant. This is called intention. Google translates the currency of intention into several billions of dollars each year. They know that when you come to Google, your intention is to find something. They delight in telling you that in .02 seconds, they have found 2,374,345 things that you may have intended to click on. They offer all of their services for free. Why? They know that if they pay off your intention with valuable information, you will keep coming back, and they assume that if you show up often enough, you might click on something they get paid for. And you do. We all do. A lot. It's the best currency of intention to cash money translation engine ever created.

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While you may not operate one of the world's most successful online services, you can extract tremendous value simply by understanding what your audience intends to find. That audience may be customers using your e-shopping cart, readers of your blog or simply friends on your Facebook profile. Regardless, understanding why your audience is there and what they intend to find is essential.

Often, this currency is in play when designing and developing websites. There's a saying, "If you ask the wrong question, you're guaranteed to get the wrong answer." The question I get asked all the time is, "How do you like the look of our site?" Who cares! The proper question is, "What do our users expect our site to do and, when they visit the site, do we satisfy their expectations?" The proper question is not, "What do you think of our website?" The proper question is, "Has the site met or exceeded its conversion goals, or have you been able to measure and profitably package your audience for yourself or for your clients?"

Are you identifying audience intentions and delivering on their expectations?

There are several other online currencies covered in Chapter 4. Overcoming the Digital Divide is available as a Kindle e-book or a book at Amazon and other fine bookstores both online and off.

About the Author: Shelly Palmer is the host of "Digital Life with Shelly Palmer," a weekly half-hour television show about living and working in a digital world which can be seen on WNBC-TV's NY Nonstop Tuesdays at 10p Eastern and online, and the host of "MediaBytes," a daily news show that features insightful commentary and a unique insiders take on the biggest stories in technology, media, and entertainment. He is Managing Director of Advanced Media Ventures Group, LLC an industry-leading advisory and business development firm and the President of the National Academy of Television Arts & Sciences, NY (the organization that bestows the coveted Emmy® Awards). Mr. Palmer is the author of Television Disrupted: The Transition from Network to Networked TV (2008, York House Press) and the upcoming, Get Digital: Reinventing Yourself and Your Career for the 21st Century Economy (2009, Lake House Press). You can join the MediaBytes mailing list here. Shelly can be reached at shelly@palmer.net For information visit www.shellypalmer.com

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