Some Economic Principles Applied to Community Networks

Should community networks partner with commercial organizations?  Why are local newspapers not succeeding in getting into the community information market?  There are many aspects of community networks and the world of community information systems where information economics theory could be applied.  This can help make some of the issues that come from partnering clearer and could help you determine whether or not your community network should partner with different types of organizations.

Niche Markets
This comes from some literature that deals with partitioning a product of any sort into a set of features.  A theory exists in the economics literature that no two products with the exact same feature set can coexist for very long in the marketplace.  One will lose out because of something, price competition is usually the reason.  One product will eventually have to sell at $0 -- something that will *not* cover costs and therefore drive that company out of business.  If the two products are not for sale, the one that is easier to use or the one that has lower transactions costs will be the one that will eventually be used the most.  The community networking example here is: What features do community networks have that a commercial site providing local information does not?  What does a commercial site have that a community network does not?

Product space
The next issue that will arise from the niche market is whether or not the differences in those products will be enough of a difference for both to exist in the same market.  If they are too close together in product space (i.e. too many features are the same) there will not be enough of a customer base for both products.  The results will be the same as in the above section. Ideally, two products exist separately with a bit of overlap in the customer base -- those are the customers that get fought over in advertising campaigns. A good non- community networking example is political parties.  The democrats have some issues and the republicans have some issues that they rarely waver on (think abortions if you're feeling like these two parties have become the same).  The things that they fight about during election years are designed to attract the people who could go either way for some reason.  The democrats have the left of the political spectrum, the republicans have the right, and they fight over the center.  A community networking movement example might be: Do local newspapers do something too similar to community networks?  Do community networks do something too similar to newspapers, and is that why the local newspapers are slow to move online?

Information Value
What is the value of information?  What is the value of those separate features?  One person is obviously going to value some bit of content differently than another. One person may care about the score of the Michigan basketball game that happened this afternoon, but it is unlikely that a person in California will.  On an aggregate level, you can determine which features one group of people has the highest utility for.  It is one reason that web logs help determine what ones audience wants to see.  One community network cannot give everyone exactly what they want, but we give enough of them what they do want, and don't throw what they don't want in their faces to make them want to come back.  This way they value the information that we provide more than they would otherwise.  What content do the people who visit any community network want? This should be different from community to community because each community is different.

Value of Other Features
There are a couple of different ways to define information; one is a piece of content like a basketball score.  Another way is to define it as a process.  A recipe is one way to think about this.  It's a piece of information that allows one to have a non-information product at the end of it.  Think about the skills that any local community network has from its workers.  What can they do that the local newspaper or other local content provider cannot?  Do the people in the community value that?  If so, it's entirely possible that a community network is needed.

Brand Management and Reputation
People don't like to think.  It's a difficult thing to do and a lot of time and energy goes into reducing the amount that people think.  One way to do that is to have a something that will easily identify ones product so the consumer doesn't have to think about the quality and features of a variety of products.  Think back to living in your first apartment.  Did you know what type of dishwashing soap to use?  Probably not.  So you bought one, maybe because it was what someone at home used, maybe because someone you knew used it or maybe you just grabbed one at random from the shelf.  You tried it.  Maybe you liked it.  Maybe you didn't.  If you didn't, you probably tried others.  By now, though, you probably have a favorite and just use that one, knowing what the quality and features of it are.  You assume that there will be no change in these things because the company is probably stable and hasn't just been bought out by someone else. Any community network has a brand name that is worth money.  A brand name and a reputation is a quality indicator. Losing control over content means that one’s brand name may suffer.

Trust
This is related to brand management.  If your product's quality is not stable because you keep changing something, trying to make it better, you won't get trust from your users/customers/patrons and they'll use something else, despite the fact that your product or community network might still be better.  Any community network wants its customers to trust them and is understandably leery of a possible content control change.

A Well Organized Web Site
Someone made the comment in the discussion that all a commercial site had was the same content with slicker artwork. While this may be true, it also hearkens back to the ideas of niche markets and product space. If the same content exists in two places, but one place makes it easier to find the content that you want, you'll go back to the site where it's easier to find what you're looking for.  A main principle in any electronic commerce will emphasize the importance of the public being able to find your product and retrieve information about it, or from your product.  If the costs in either time or money for using your site are too high, then people will just go buy a newspaper instead of using your site for getting their information.

Strategic Partnerships
During the recent discussion of many of these issues on the listserv Communet, it was mentioned that one specific community network had profited most from partnerships with technology companies, and not with other information providers.  It may be that community networks discover and disseminate local information on the internet better than anyone else in the community.  This indicates that they should concentrate on what they are good at and partner organizations that can complement their skills.  Again, use the skills that you have, these are your strengths.  Partner with those whose skills you need but do not possess.  Some community networks have the technology skills.  They may need to partner with other organizations that have the local information skills.

These are just a few of the economic principles that can be applied to the field of Community Networking.