Monetizing Coolness
Becky Lang again here. Being a member of generation Personal Brand® (my current moniker for my twentysomething peers), I made sure to see “The Social Network” on its opening night. And boy was this truthy, Nine Inch Nails-scored flick about a young, sexy – possibly autistic – CEO everything I had ever dreamed and more. But this isn’t a film review. This is a post about monetizing coolness.
Before you get up in arms about how tacky those two words look together, keep in mind that the world is going to end in about a year, and, as promised, it is going to go out in a swirl of marketing jargon and Justin Bieber haircuts. (And sweet, sweet iPads.) Just kidding, of course. When I think of those two words together, I think of another hot theme that has been running through the heads of Freakonomics readers for the last couple years, namely, how you monetize “free.”
Facebook itself is a story of the slow burn that is turning something both free and cool into a company worth roughly $33 billion, and most of the conflict in “The Social Network” arises from this challenge.
“We can’t put ads on the Facebook,” Zuckerberg tells his friend and Facebook CFO Eduardo Saverin, “The Facebook is cool, and that coolness is priceless.”* Despite using the word “coolness,” this scene makes Zuckerberg look ingeniously prescient about the trajectory of his invention. He was, as time would show, completely correct, despite there being few similar instances that he or the more business-savvy Saverin could have been modeling after. The idea of a free service ignoring its own financial well-being as a model for corporate success was, as far as I know, one they were inventing. Zuckerberg certainly wasn’t looking to his soon-to-be-best-bud Sean Parker’s business model, Napster.
Before comparing the two, it’s important to point out that the “free” we are talking about with Napster is inherently different from the “free” of Facebook. Napster’s peer-to-peer music sharing service showcased one crucial fact that will eventually crumble the traditional model of media products as we kn[e]w it: intellectual products are infinitely reproducible. This seems to be most obvious with music, but it can apply to films, e-books, magazines, etc. It takes almost zero resources to multiply an intellectual product exponentially on the Internet, whereas before the Internet, the physical manifestations of those products were limited resources. I’m no economics expert, but I know that something infinitely reproducible for zero cost, by anyone, adds up as .. well … worthless. Or to put it in a more fun way, free. The invisible hand of capitalism understands this as well, and that’s why getting rid of Napster has not fixed the problem either. Yes, this is a controversial stance and a pared-down look at a complex issue, but I believe this acknowledgement is at the heart of many crumbling industries.
Luckily, Facebook doesn’t exist in the depressing sphere of reproducible media. Not that Napster itself was solely a reproducible media product. Napster was, like Facebook, a service first and foremost. But in the early stages of a free, cool service, your chance of turning into a multibillion dollar industry depends on just what your service signifies. In the case of Napster, it signified the collapse of the media industry’s business model, as well as youth’s troublesome (but “cool” nonetheless) disregard for intellectual property laws. Facebook, however, signifies better things, both emotionally and financially. Emotionally, Facebook signified that humans haven’t become robotic, web-surfing loners but instead spend 80% of their time on the Internet connecting with other people. On the business side, Facebook signified that the fever dream of a future where intimate details about customers would arrive via magical algorithms that would send perfectly-targeted ads back at them via other magical algorithms was indeed possible.
That’s why Facebook was able to stay afloat without monetizing for so long. What it signified was enough to put $$ in the eyes of plenty of pocketbook owners. This story is now becoming more common: a free service comes along that tills the soil of society until oodles of new information come to the surface, and investors know there is money in there somewhere. Twitter, like Facebook, followed this trajectory, and it’s still figuring out how to make money, although everyone’s sure it’s there, somewhere.
So what’s the valuable product that arises from this model? You know the answer: consumer information. And a necessary ingredient for obtaining consumer information, which MySpace learned the hard way, is coolness. To acquire that information and turn your product into a growing meme, you need to embody what a user aspires to be and create an image of someone they can trust. That’s how Google and Apple have risen to positions where they can obtain endless amounts of consumer information with so little backlash. They’ve been cool from the get-go.
My head hurts thinking about this, but it hurts even more when it tries to contemplate how Mark Zuckerberg seemed to realize all these complexities at such a young age. Or maybe he didn’t. Maybe he just sincerely did not care about money. Either way, it’s an important message for generation Personal Brand® to take away from “The Social Network” – free your coolness, and the money will follow.
*Quote as remembered from my head. I was not taking notes.