managing user-generated content

In general, how should organizations deal with issues posed by user-generated content and other information spread over social media?

As this week’s case helps illustrate, companies need to manage customer relations because the Internet has given consumers a very loud microphone to voice bad experiences. In the case of United, its stock dropped 10% and it lost $180 million after a customer posted a video on YouTube to illustrate his discontent with customer service at the airline, connecting him with more than 6 million people in less than a month.

Although the whole situation could have been avoided with better customer service from the beginning, I think United’s response to Carroll’s video and tweeting helped mitigate some of the bad PR it received. In the wake of its bankruptcy, it’s clear that United divested a lot from its human capital, and the employees that survived several rounds of layoffs were under trained and possibly overworked. United used the video as an opportunity to engage with its customers and employees, and start rebuilding its culture. 

at the same time, social media and user generated content provides an opportunity to identify and engage with loyal customers. This is a benefit because it allows company to build a relationship with their customers and better understand the factors and features that influence their purchase decisions.

in order to diffuse customer complaints and identify loyal, happy customers, companies should monitor and search social sites for mention of their name and become active participants and social peers on these sites. in order to prevent potential complaints from becoming large problems, companies should be proactive and constantly monitor online conversations and mediate when necessary. the United case shows that when a problem is unattended to or doesn't have an equitable resolution, it can be very costly. 

Hulu's Value Proposition

Hulu was formed as a Joint Venture between NBC and News Corp. (Fox), and later included Disney. Even though it began as an agreement between two conglomerates, Hulu has started its company and vision from scratch. Its culture emphasizes frugality, meritocracy, and ownership. In order to meet its goal of helping users find and enjoy the world’s premium and professionally produced content when, where, and how they want it, Hulu aggregates video content and facilitates distribution in order to make television shows more accessible than what is currently offered by cable operators. I’ve summarized the value proposition for each of its customers below:

Content owners: By 2009, Hulu has partnered with 170 content owners and 30 affiliated websites to acquire and distribute premium video content online. In exchange for its content, Hulu offers networks and equity partners the majority of the ad revenue generated by their content. Participating with Hulu and its affiliated websites is an advantage because in many cases, content owners and networks can grow their audience by making it widely accessible online. This increased audience means that the content owners will receive a premium on advertising during their shows. While this shift to online streaming affects the traditional distribution channels and the amount of revenue networks can receive from license fees, Hulu can potentially provide its content partners with increased revenue from advertising generated by its content.

Users: One of Hulu’s objectives is to bring the content to its audience by making it available through several channels rather than forcing them to come to its site. Rather than a passive experience with cable television, Hulu has created a social experience for its users by making it free, easy, and intuitive, as well as providing the option to review the content. Also unlike cable television, Hulu responds to user feedback and limits the amount of ads cluttering the site in addition to offering content with limited interruption. Hulu also allows options for embedding, which further enables content sharing and encourages new users to discover the content. While Hulu is trying to help the content owners monetize this larger user base, it does make it harder to own and control the content.

Advertisers: Hulu has taken advantage of online media to offer more targeted, interactive experiences for its viewers, allowing the advertisers to create more effective and relevant ads than what can be seen on cable television. Through it’s three ad options (standard, premium, and exclusive), Hulu provides a range of options that provide an advantage to advertisers because the ads integrated into a show can not be skipped or fast forwarded, unlike what happens on recorded shows on cable television. Furthermore, Hulu can collect demographic, geographical, and search behavior and sell ad space at a premium because the advertisements will be more relevant and effective.   

Google

Google has been successful because it provides great value to users and advertisers. Users like Google because its search results are thorough, accurate, and seem objective. The paid listings are not obtrusive and they are relevant to users’ search needs. Many of the services provided by Google, including search, email, and document management systems have been free to use and includes a high level of online storage.

Google subsidizes the free services by charging advertisers a premium to access Google’s millions of users with targeted advertising. Advertisers (most anyway) liked Google because the majority of their customers use Google and market research shows that search engine leads are more effective because these users are often searching for something they are looking to purchase soon and paid listings are therefore more relevant. Google has been successful because it has improved on CPC and considers relevance. Furthermore, Google’s products and services have attracted 2-3 times more advertisers than Yahoo; Google’s network offers more search traffic. Therefore, Google increases its value to advertisers by providing more space and more contextual/targeted ads.

Additionally, Google's culture and emphasis on innovation has helped it pursue many successful initiatives. It utilizes a mixture of small team work and individual time to pursue new projects outside of Google's current core business. Google's golden rules and philosophy help establish a framework for innovation and creative constraints, yet it still gives its employees the freedom and flexibility to pursue and try new ideas. The result is a plethora of projects and products that extend its core business and its online presence.

Google has been able to use the momentum from its early successes and has continued growth by expanding into several different industries. Moving forward though, Google needs to articulate a long-term strategy that supports this growth and yet is still consistent with its mission of making the world’s information accessible and useful.

challenges for Internet Start-ups

there are several challenges that internet companies must overcome when starting their business:

1. since the internet is a much larger market, e-commerce start-ups are challenged to understand a wider set of consumers

2. the larger market also means internet companies are open to global competition

3. e-commerce differentiators can quickly disappear due to rapid change in technology

We saw during the Taxi Magic presentation that the founders initially had a hard time understanding their customers' needs and how to provide a value added feature to their site. The Taxi Magic team had considered their market to consist of business travelers and tried to develop applications specific to their needs, though it wasn't until they understood a much larger market of consumers that they were able to successfully implement Taxi Magic. Although Taxi Magic doesn't currently face much competition, it recognizes that it is a constant threat. Consequently, I got the feeling that Taxi Magic worked to understand its current and potential market, and made adjustments to its business model in order to stay relevant in an ever changing industry.

Based on MusicJuice case, its owners never really tried to understand the US music market and their potential customers until after the site was launched. It doesn't seem like they tried to determine the market factors and attitude drivers relevant in Europe that made similar sites successful, and whether or not those factors were present in the states. Furthermore, the founders were so emotionally vested in the project that they weren't objective and flexible enough to stand back and adjust their original business model in order to make it more viable in the US market.