Interview: Charlene Li On Web 2.0 (Part 1)

My next book will be about Web 2.0, a term which means different things to different people and no one much likes anyhow. To get my arms around the subject,  I’ve decided to interview a bunch of smart people who can give me a good overview.

Charlene Li, Forrester Research’s celebrity analyst was my first choice. Covering online media, marketing, social computing and search, Charlene has become one of the most respected observers of these topics.

She’s been immersed in online interactive communities about as long as anyone. She has five years hands on experience in content publishing and online community building,  first with Knight Ridder and then with Community Newspaper Company where she started a series of online town sites. In many ways these modern versions of the old-fashioned New England town meeting were prototypes for today’s online civic journalism.

Working now from her new Northern California home, she is a frequent speaker at social networking conferences.  I’ve caught her twice in recent months and both times walked away armed with valuable new statistics and insights. 

We spoke for a couple of hours at a local coffee shop, competing with after-school teens and piped in music. We rambled through all sorts of issues.  Charlene had a great deal to say, more than I could cram into a single post. This is Part One. Part Two will appear in a day or two.

Defining Web 2.0

I asked Charlene how she defines this thing called “Web 2.0.”  She uses what I consider a Biblical definition. In the beginning, Web 2.0 referred to the technology and framework.  Ajax and wikis would be Web 2.0. This is how Charlene still defines it. The people-to-people companies the rest of us  throw into the Web 2.o bucket—such as Riya, Flock and Edgeio, Charlene calls Social Computing companies. She positions this latter group at the heart of the current transformational phenomenon.

While many bathe in KoolAid, Charlene maintains a more sober, even-handed view. Her customer is the enterprise thinker. Forrester is among the most respected keepers of business numbers and spotters of business trends and what it says has considerable influence on both business and the media.

And while blogging and Social Computing numbers can sound huge, when compared with what they were a few years ago, she emphasized they remain a very small slice of a very big  demographic pie. According to Forrester, only ten percent of adults in the US are reading blogs regularly. Less than one percent listen to podcasts regularly. Corporate adoption is happening but at a slower rate than many of us would expect.

Except in one very significant area—youth. One-fourth of America’s adolescents are tuned into blogs, explaining perhaps why LiveJournal appears to be so much more successful than MovableType and why MySpace feels like THE space to its community members. Blog adoption is also growing at an astounding pace, doubling about once each year.

This is extremely relevant to the direction of business. Young people, obviously, are going to be around buying goods and services longer than old people. They are going to be disposing of discretionary income for a great many years. The freedoms they take today as self evident will remain that way long after their rebelliousness grays away.

Blogging in their DNA

“Blogging is in their DNA.  They clutch to their self expression and will be unwilling to give it back” as they move forward through life, Charlene observed.  What does this mean to business?  A great deal. It forebodes a future where companies that do not allow employee blogging will lose some recruits.  It means that as this generation emerges, there will be a trust gap in companies whose employees do not blog.  Companies may be doing very well today without blogging, but over time, as their customer base ages and starts dying off, they will have difficulties attracting younger replacements.

Charlene also noted that blogging tools have begun to evolve into more expansive applications. “They are a content management system, an online publishing toolset,” she told me, noting that she is seeing static websites being built with blog tools because they are faster, easier to build and, equally important--easier to update and revise. A year ago, Six Apart’s Loic LeMeur  reported the same thing was going on in Europe, where webmasters were buying MovableType and using it to avoid HTML on static sites.

I wondered about the slowness of corporate acceptance. I asked her what Forrester was telling corporate customers.

“We are telling them that the corporation has a huge opportunity [with blogging].  This is a way to get back control by giving up control.  We advise companies to give up more control,” she said with some passion. Are they fearful of receiving negative comments? “We get companies to say they can’t do it because of the usual negatives, because of law suits, bad comments, etc.  We tell them they need to develop thicker skin.”

I recounted the difficulties Robert and I recently had in discussing the ROI question at Amazon.com and asked her how she addresses ROI in talking with large companies.

“It’s really difficult to answer. It’s going to differ for every company, yet there usually is a cause-result that comes out. Look at GM. Have they sold more cars because of the blog? Probably not yet. Is the stock performing better? No, they’re losing too much money (NOTE—this interview was held prior to GM’s announcement of smaller losses in the last quarter). Are they getting better press?  Maybe a little, but not much--except in the blogosphere.

“So where’s the ROI?  Lots of customers are talking about GM all of a sudden. People like you and me who would never consider a GM car are taking a second look. [GM Vice Chairman Bob] Lutz blogged a lot about the Pontiac Solstice and the car is an apparent success.  What’s the ROI?  That’s for GM to determine but it’s obvious that they see one.  They are expanding there blogging activity.”

From her perspective, the key issue is the possibility that arises when you put publishing capabilities into the hands of a product manager—any product manager.

“Maybe it works and maybe it doesn’t. But to not consider the issue is foolhardy. Each company needs to make a rational decision. They need to ask: is blogging a rational place where customers may want to hear from you.”

Charlene thought that Robert and I had “slightly overstated the case” in the book where we declared nearly every company should blog.  But then she noted the potential for blogging as a recruiting tool.

“Every company should have a recruitment blog. Blogging recruiters will put a human voice on the company.”

Changes Big & Small

So where is all this next generation stuff going?  Charlene had thoughts about changes both big and small. 

• First, RSS is bigger than blogging itself and has already begun to spill over to the way other online media deliver news and information, the New York Times and Yahoo being but two examples. Charlene sees RSS-delivered earning releases and podcasts of post-earning conference calls so that time travelers can hear what was said.

• More traditional marketers are also modernizing with RSS. For example,Silverpop an email marketing company is using RSS to feed email newsletters to subscribers.

• She believes that Doc Searls is spot-on with his belief that  the Intention Economy is going to emerge as very significant. The way it works is simple: I tell you what my intentions are: buying a car or a home, traveling to a foreign country. You get to send me ads and announcements that you think will be relevant to me. I choose what I want and after that you all go away.

While significant to business, this is of course all incremental.  Where Charlene sees the greatest change is in the point solutions—the one-stop, one-service, places, such as a beauty supplies service that blogs and uses online interactive approaches to finding, retaining and fulfilling customers. These  vendors can be highly profitable and reach global markets from the comfort of a single server based business.

NEXT: What happens when the power moves from companies or even governments into the hands of communities? Charlene shares her vision for the future.

Comments

[Ed Terpening]

To your point regarding negtative comments on blogs. That was a convern for us, and I believe we were prepared for it. However, I'm happy to say that negative comments on our blog have been a tiny fraction of the overall comments (< 1%). I think the "living room" principle is in play here, people will be more civil if they know you and others are paying attention, listening, and honest about your own difficiencies.

[Shel Israel]

Ed,

The best I can make out less than one percent of all commens left n corporate blogs are negative. Most of those are discounted because they are clearly being left by "off topic" people. It's a shame you missed the 99% favorable comments you might have experienced.

[Kevin Reid]

Very insightful. Any corporation that is not *at least* monitoring the blogosphere at this point is in trouble... think of all of the missed opportunities (and of course the problems.) It may be time, however, to expand our thinking beyond blogs (and this, of course, is why you are now writing a book on Web 2.0) to the larger world of user generated media. User make mini movies these days, for example. Corps now need to monitor MySpace, YouTube, Flickr, etc. And, I don't mean that blogs are fading away into the distance... as a networked medium, it is all connected. Blogs have helped to grow these newers tools.