On November 10, 2007 Harvard Business School hosted CYBERPOSIUM 13 an annual conference which this year focused on "Innovation Without Borders". The conference breakout sessions included "My Free Media, Now!" that discussed the business models that will enable monetization of old media companies, "...What good is Social Networking" that touched on the benefits and lessons learned from social networking's meteoric rise in recent times, and "Online Games and Virtual Worlds: More than Just entertainment?" which discussed how companies are monetizing these virtual worlds.
The media session noted the almost complete migration of on-line content to and ad supported financial model (with the on-line Wall Street Journal noted as a highly successful exception to this rule). The need to up the ad revenue through not just providing "eyeballs" but encouraging engagement (and thus generating more revenue) was noted. Targeting advertising to appropriate viewers was highlighted with an objective to move the CPM (cost per thousand) for viewers from modest revenues ($1/1,000 viewers) to figures such as $100/1,000 for highly targeted technical publications and viewers. Potential beneficial linkages between the traditional media content and the cyber-media content was also discussed.
The social networking tract demonstrated several different business models. LinkedIn's Senior Director of Products, Adam Nash, noted that their business model is not to try and monetize every visitor but to build applications and monetize via subscriptions to individuals and corporations (although they also sell more standard classified ads for job listings and related topics of interest to their users).
It was noted that users want a public profile on-line however it is important to assure key pieces of information are not made available by users to prevent the facilitation of identity theft. Having a private versus public network supported by user generated content and trust was identified as important to retain the faith in and utility of the system for users.
The gaming/virtual world session noted significant market potential with penetration of massively multi-media on-line games (MMO) at only 15% of on-line gamers and virtual worlds such as Second Life with less than 1% penetration. Even at these penetration levels significant revenues are being generated. It was noted that the World of Warcraft game is generating more than $300 million of revenue/profit per year. Revenue models range from selling user subscriptions (World of Warcraft) to providing the games free and selling elements to use/improve the gaming experience (an example was made of a cart racing game in Asia that is free to users and still generates over $100 million per year selling elements to add to/personalize user carts).
Second life's corporate business model is to earn money by selling real estate on the site which can then be developed by users. Second Life's business model has created opportunities for its' users to capitalize on the environment by creating and selling products in the virtual world. Philip Rosedale, the founder and CEO of Linden Labs (makers of Second Life), noted that about 4,000 users earn more than $1,000 per month in the virtual world and that 40,000 users are cash positive on their virtual world experience.
Issues with user interface challenges to enable more mainstream adoption and the problems of game piracy that require constant game evolution to mitigate were also discussed.
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