“What Business Are We In?”
These words were asked by Sharyl Sandberg when she was hired as the COO of Facebook in March 2008. These are the words in the new book The Facebook Effect, which I highly recommend. The deeper I got into this read, the more I wanted to write a post about the business aspect of Empire Avenue. I wasn’t sure how to do it until Elle Thibeau really got me thinking with her post on Wednesday. Her provocative argument on whether the current share upgrade system makes sense got me thinking…. Why does Empire Avenue Exist? What busines are they in? Up until this point its been a fun game to meet people and build some traffic to your personal online profiles. However, I think EA has some disruptive things planned in its near future.
Next: Setting their sights high.
The goals of Empire Avenue are paraphrased by a press release right on their blog: “The site empowers individuals to turn the value of their online contributions into real revenue, challenging Google’s dominance in online advertising with a more relevant and targeted advertising platform” A bold statement to be sure.
This advertising itself isn’t really big news. As an example, check out this Mashable article, which is sponsored by Microsoft. In this case, Microsoft provides some cash to support the content with the writer of the content and the site getting some cash to keep their business running. This is a common arrangement in the blogging community, as advertisers are looking for news ways to reach their increasingly fragmented audience.
I think the revolutionary part about Empire Avenue is that the average blogger did not have a way to monetize their online influence or activity without having some solid industry connections. I believe Empire Avenue is opening up this market to the average joe. This of course, doesn’t mean that anybody who blogs or goes on Facebook is going to make money.
Unlike a game like World of Warcraft (where every player pays $15/month), Empire Avenue players could potentially have different economic value to the company. At the end of the day, Empire Avenue is a place for players (individuals and companies) to buy and sell advertisements with the cost of those advertisements likely based on a players influence.
For example, if I’m Apple, I’d likely rather buy ad space with an (e)ADRIEL, than someone who just started their account and doesn’t have much influence yet. Does this mean that EA should ignore the little guy? Absolutely not. Without the players who are investing in those with the larger influence, that large influence wouldn’t exist!
So, how does this relate to the share upgrade issue Elle discussed? Imagine Empire Avenue did not have an increasing level of difficulty then the leaders such as our friend mentioned above would be able to wield such a commanding lead over everyone else that companies may only want to purchase ads with a few select people… which would not be good for for that person who isn’t “high end” and wants to make some cash off of their influence.
I truly don’t believe that the end game is maximizing share price. I think the end game of Empire Avenue is having a solid fan base that believes in your opinions and values. I think this manifests itself through dividends. I believe stocks with a solid, stable share price and good dividend income will prevail. If this is the case, then the share upgrades (which can be made cheaper by paying some $) will serve not as a way to increase your wealth of eaves, but to allow more people to buy into you, therefore increasing your influence and making and you more attractive to companies who want to buy ad space with you.
That being said, share price is a big determinant in getting page views, which drives value for advertisers, so I could be off track with my dividends theory.
What do you think? What business are YOU in?
For more information on Empire Avenues business model directly from the man (e)DUPS himself, check out this interview.