Chapter 10: Social networks, auctions & portals Flashcards
Define and differentiate the different types of social networks and online communities.
There are 5 social networks and online communities:
1. General communities = offer opportunities to interact with general audience organized into general topics. These platforms are advertising supported. Example: Facebook.
- Practice networks = offer focused discussion groups, help, and knowledge related to area of shared practice. May be profit or non-profit, rely on advertising or user donations. Example: LinkedIn
- Interest-based social networks = offer focussed discussion groups based on shared interest in some specific subject. These are usually advertising supported. Example: Discussion forum
- Affinity communities = offer focussed discussion and interaction with other people who share the same affinity (self or group identification). Rely on advertising and revenues from sales of products. Example: blogs
- Sponsored communities = Created by government, nonprofit, or for-profit organizations for purpose of pursuing organizational goals.
Define (online) auctions & benefits, NOT types & examples & behavior.
C2C sites that make it possible for users to bid on certain goods that other users put on the platform.
The benefits of auctions include:
- Liquidity = agile, seller can find buyers and buyers can find sellers from all over the world very easily. Since the reach is so big, it is easy to find a market for every type of product.
- Price discovery = prices develop automatically and efficiently, even for items where it is not easy to determine a price.
- Price transparency = everyone can witness the price and the price biddings, so it is a very transparent process
- Market efficiency = related to an increase in consumer wellfare. Prices are generally lower in online auctions Good for consumers, bad for producers.
- Lower transaction costs = the cost of sending and purchasing will be lower with online auctions.
- Consumer aggregation = sellers have access to an enormous network of consumers that are willing to buy.
- Network effects = the bigger the online auction becomes in terms of amount of sellers, buyers or product range, the higher the perceived value of the action becomes.
There are also some benefits for the auction providers:
- No inventory
- No fulfillment activities: no warehouses, shipping, or logistical facilities
- eBay makes money from every stage in auction cycle:
- -> Transaction fees
- -> Listing fees
- -> Financial services fees
- -> Advertising or placement fees
Define Portals , the Types and their business models.
A portal is a specially designed website that brings information from diverse sources, like emails, online forums and search engines, together in a uniform way.
There are 2 major types of portals:
1. General purpose portals (or horizontal portals) = attempt to attract very large general audience and retain it by providing in-depth vertical content channels. Example: Yahoo
- Vertical market portals = attempt to attract highly-focussed, loyal audiences with specific interest in: community (affinity group) or focused content. Examples: iVillage, ESPN, …
The business and portal revenue models consist of:
- Advertising revenue
- Tenancy or ‘sole provider’ deals (fixed charge for number of impressions)
- Commissions on sales
- Subscription fees (freemium also possible)
- Applications and games
What are the risks and costs of auctions for consumers and businesses?
There are several risks and costs attached to online auctions:
1. Delayed consumption costs = auctions can run for days so it might take a while before you have the product.
- Monitoring costs = They are also tyring for consumers, since bidding wars can come from this. Possible solutions include:
- Fixed pricing
- Relating systems
- Buy it now button - Trust risks = some consumers might become sceptical of the auction platform. The inclusion of rating systems could solve this.
- Fulfillment costs = packaging costs, shipping costs, insurance costs, …
