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Jonathan Bishop
Glamorgan Blended Learning Ltd, The GTi Suite, Valleys Innovation Centre, Navigation Park, Abercynon, Wales, CF45 4SN, UK

It has been argued that the consumption of club goods, where access to them is excludable and nonrivalrous, requires optimal exclusion as well as inclusion. Increasing membership appears to be a particular concern for providers of online communities and in addition increasing the participation of the membership also seems to be important. This paper defines online communities as virtual club economies, as they often exist to allow their members to share club goods. The paper explores various social networking services, finding that those with the highest number of subscriptions follow the guidelines proposed in an influential book on online communities and proposes five principles of managing these virtual club economies. These require as part of a strategy for providers to know their technology, know their subject matter, know their stratum of the wider virtual economy, know their policies and know their purpose. Each of these principles is elaborated on and the paper concludes that the ultimate purpose of a virtual club economy is to maximise the availability of its club goods, such as content to meet its inward goals of sustaining its existence and providing for its membership and wider objectives that suggest a purpose to outsiders and give insiders the motivation to remain as members.

Virtual communities, e-commerce, economics, social networking

It has been argued that the consumption of club goods, where access to them is excludable and non-rivalrous, requires optimal exclusion as well as inclusion [1]. Increasing membership appears to be a particular concern for providers of online communities [2] and in addition increasing the participation of the membership also seems to be important [3,4]. These members are the participants in the economic system, and have also been called agents [5] or actors [6]. The later of these will be used throughout this article. The success of contemporary social networking services, which have come to be the enabler of virtual economies, is often measured by the number of subscribers they manage to accrue, as this often means they are able to sell more advertising space to distributors of private goods, as is the case with MySpace, Orkut, Facebook and Friendster, which at the time of writing respectively had the highest levels of membership of all Circle of Friends-based social networking services. The Circle of Friends (CoF) is a database-driven programming technique that allows actors to manage their social network and share it with others, which was initially used in beta on a website called, ‘A Guide to Robin Hood and Northern England’ in 1999 and then formed part of a website called ‘Llantrisant Online’ in 2001 before being adopted by Friendster in 2002 and MySpace in 2003 [7,8]. These earlier two of these websites share similar features to later two, while differing from them in that their membership is more heterogeneous than homogenous. This would appear to suggest that the key to gaining a high membership is developing a site that attracts diverse groups of individuals, but this raises the question of


whether the social networking services with the highest subscriptions are actually capable of catering to the diverse needs of the membership in the way that stand-alone online communities with a homogenous user-base are able to.

There has been an explosion in virtual club economies since the end of the 1990s when a lot of ‘how-to’ books on online communities were published. In this context a virtual club economy can be seen to be an online community that exists to share club goods using an optimal level of private goods. One highly influential book on developing virtual club economies was ‘Community Building on the Web’ by Amy Jo Kim [9]. This book set out a framework for building online communities that are successful and its contents led the author to wonder whether some of the leading online communities actually follow it. Kim suggests to build successful online communities there needs to be meeting places, sub-groups and user profiles, and the site needs to welcome visitors, instruct novices, reward regulars, empower leaders, honour elders, develop ground rules, enforce policies, evolve rules, support events and allow for rituals.

2.1. Methodology
A survey of the most notable social networking services was carried out, which were selected by referring to the ‘List of social networking services’ page on Wikipedia. Wikipedia is subject to abuse from individuals with vested interests, which means that there are often omissions and inaccurate inclusions. However a study has found that Wikipedia articles are sometimes as accurate as those in Encyclopaedia Britannica [10], although this particular study did not select its articles at random so it is questionable whether generalisations can be made. Despite these risks of inaccuracy and partiality, the list available on Wikipedia was used for this study. A total of 92 social networking services were considered, with 28 of these being disregarded for a number of reasons, including that there were language issues, age-related barriers, and closed membership difficulties. The survey consisted of using binary notation to encode whether the social networking services selected complied with the criteria of [9]. Each criterion was given a value based on the number of pages dedicated to them by Kim. If a social networking service passed the criteria they were assigned this value and if not they scored 0 for that criterion. The total of the criteria scores were calculated and the social networking service assigned this as a score.

2.2. Results
A cluster analysis as described by [11] was carried out on the data. Five clusters were identified as presented in Table 1. As can be seen from this table, the cluster with the lowest number of subscribers scored lowest in reference to meeting Kim’s criteria and the two clusters with the highest number of subscribers had the highest scores. This suggests that Kim’s guidelines for developing online communities if followed can lead to higher numbers of subscribers. What is apparent from the cluster analysis is that the cluster with the lowest number of subscribers did not have any sub-groups and did not instruct new members on how to use the community. This suggests that the social networking services that allow their members to manage their own affairs, such as subjects of interest are more likely to increase their subscriptions. Also apparent was that the communities with the highest number of subscribers also had the most effective deployment of policies. The most popular communities were also those who appeared to know their members well and took into account the motivating factors of regular users.


Table 1. Cluster Analysis of the Dataset
Cluster Subscribers Sub-groups Meeting Places Profiles Welcomes Visitors Instructs Novices Reward Regulars Empower Leaders Honour Elders Develop Ground Rules Enforce Polic ies Evolve Rules Events Rituals Score 1 307,078 0 1 1 1 0 0 0 0 1 0 0 0 1 138 2 1,528,611 1 1 1 1 1 0 0 0 1 0 0 0 1 186 3 4,300,000 1 1 1 1 1 0 0 0 1 0 0 0 1 186 4 6,806,325 1 1 1 1 1 1 0 0 1 1 0 1 1 242 5 8,638,806 1 1 1 1 1 1 0 0 1 1 0 0 1 198




It is strongly argued by Michael Porter that strategic fit, which is the result of the positioning choices that determine not only which activities a company will perform and how it will configure individual activities but also how activities relate to one another, is among many activities that are fundamental not only to competitive advantage but also to the sustainability of that advantage [12]. Porter indicates that it is harder for a rival to match an array of interlocked activities than it is merely to imitate a particular sales-force approach, match a process technology, or replicate a set of product features. It is apparent from the above investigation of social networking services and exploring the literature that an online community provider in order to form such a strategy needs to know the technology options they can drawn on, know the subject matter that will form part of their fit, know the nature of the stratum of the population they will focus on, know the policies that will enable participation, and know the purpose of the community and how it fits into the wider scheme of things (see Figure 1).
High Potential Online Community or E-Learning System Know your Technology Know your Stratum Know your Subject matter Know your Purpose

Know your Policies

Figure 1. Five factors for creating high potential online communities

3.1. Know your technology
Evident from the cluster analysis is the role technology such as meeting places and subgroups plays in successful online communities, with online communities without sub-groups having a lower number of subscribers than those that do. This suggests that the first step to understanding these virtual club economies is considering what types of communications software are


available, what types of application that software is best suited for, and what it takes to build and maintain gathering places using that software [9]. When thinking about online community technology it is important to distinguishing between those that are private goods and those that are club goods. There are many technologies that facilitate group social interaction in online communities, which support many different formats of conversation, from simultaneous meeting of dozens of chatters to extend collective correspondence about weighty topics in online forums [13]. Online communities can be established by including communication tools that have been as either synchronous or asynchronous tools [14]. These are the virtual economy’s club goods as they are the facilities provided by the club. The hardware, software, bandwidth and time that the actor that is a member of the club uses to access are private goods because others are excluded from using the same computer and once the bandwidth is utilised it cannot be shared by anyone else on the same connection. The facilities on offer in a virtual club economy indicate the genre of online community the website finds itself categorised in. There are several main types of online community technology [13], which were expanded to consist of seven solid genres, namely the personal homepage, the message board, email lists and newsletters, chat groups, virtual worlds, weblogs and directories and wikis and hypertext fiction [15]. In developing an online community managers wishing to provide facilities to members of these virtual club economies need to look at the advantages and disadvantages of each platform. The advantages of the personal homepage is that they are easily updated and allow actors to connect with those that they know through leaving messages and joining a Circle of Friends. The disadvantage of this genre is that members often need to re-register for each site and cannot usually take their Circle of Friends with them, which requires them to contact all their friends to request that they join. Social networking services such as Facebook have however used this to their advantage to build up a large list of subscribers who use the online communities that they host. The advantages of the message board genre are that posts can be accessed at any time and it is often easy to ignore undesirable content. The disadvantages include that threads can become very long and reading through the messages is time consuming. It is also a challenge for managers to keep the topics relevant to members and some members may leave the club if discussions become overwhelming. The advantage of the email list is that it allows an actor to receive a message as soon as it is sent, but the disadvantage is that actors cannot always access an archive of messages. Chat groups allow actors to communicate in real-time, but posts can be sent simultaneously and the user can become lost in the conversation. Virtual worlds have their advantages in that they allow a user to get more involved in the community through 3D metaphors. However they have their disadvantages in that they require certain hardware and software that not all users have. Weblogs and directories can be good platforms as they are easily updated and allow for regular and managed content. The disadvantage for members of the community is that they cannot start topics, but only respond to them. Wikis and hypertext fiction based services have their advantages in that they can allow for collaborative work on literary projects, but they can also bring out the worst in people, such as their destructive natures. Allowing members to locate others could be an important factor in retention of members. Whilst it was once argued that the lack of social and physical cues in online environments makes it difficult to find out if another online community member has similar characteristics [16], technology has changed this allowing online community providers to facilitate their user’s ability to locate others with similar interests. Reputation systems used in online communities can signal the trustworthiness of other members of the community [17], allowing members to better decide how to deal with others in the virtual club economy.


3.2. Know your subject matter
The cluster analysis showed the importance of content such as user profiles to an online community. Whenever social actors enter a site with community features there has to be something that draws them there, something that sets the tone, something that provides a clear example of what the site is about [18]. An online community’s content is the hook that attracts actors to it if it is focussed on their interests [19], and can be seen to be some of the club goods that make up these virtual club economies in that they are non-rivalrous because one actor’s use of them does not deprive others in the club from using them and they are non-excludable because if one actor in the club uses them it is impossible to prevent others from using them. A website’s content if meaningful can attract actors who might not normally use the service and could turn them into customers, or potentially members [20]. Content that matches an actor’s interests could turn them into active participants as those actors with particular interests might seek to maximise their interests by seeking the same subject matter on the Internet, on television, in magazines and in newspaper, which requires them be more active than passive in their viewing, reading, listening and surfing [21]. This provides the managers of online communities the opportunity to strategise the type of content generated to fit with the trends of other media outlets and use club goods in such a way that there is an increase in the retention of members. Such strategies can take into account the role of narrative in structuring textual material to allow readers to develop meaning from them and this is best achieved through narrative codes, such as action codes, enigma codes and culture codes [22].

3.3. Know your Stratum
Evident from the cluster analysis was the role the users play in successful online communities, including factors such as welcoming visitors and instructing novices. The social actors that make up an online community are its ‘pulse’, as without them there is no community [23]. The stratum of an online community, that is those actors who use it that have something in common, consist not only of the core participants, but also of the staff that run the community [13]. Social networking services such as MySpace and Facebook contain many strata based around subcommunities of specific interests and personal homepages, or profiles. The personal homepage as a genre of online communities [24] has been put into perspective [15]. It can be seen from this that subscribing to a social networking service is different from being a member of an online community as the personal homepages the sub-communities of such social networking services are online communities in themselves. This suggests that social networking services such as MySpace and Facebook contain many strata that each online community that is part of that service need to understand. One of the failures in the practices of some virtual club economies is that some actors will use the club goods in the online community without producing any of their own for others to utilise. Traditionally called ‘lurkers’ these actors have been compared to free-riders, though differ from them because they do not have a permanent presence in the community. These non-participants are akin to economically inactive actors in a traditional economy, which is termed Drones for the purposes of virtual club economies [25] as like the drones in a bee hive they have little purpose other than to use up the resources available in the community. These actors have been placed into a lifecycle of economic behaviour [25], which also included the Queen Bees, the Foraging Bees, the Guard Bees and the Solitary Bees (see Figure 2). The Queen Bees of an online community may consist of the proprietors of the community who own the means of production and have the power to welcome in a kind of aristocracy of members who have broken though the barrier from being a Regular to become a Leader. Examples of these may include the Administrators on Wikipedia, who may have been elected by the community or a self-appointed leader. Like the queen bee in a bee hive, they will be concerned with increasing their numbers of workers, and like a firm in a traditional economy they will be concerned with maximising their production and supply, though this may be


measured in ‘hits’ and ‘posts’ or ‘edits’ as opposed to profit and number of physical goods produced and sold. The Foraging Bees of an online community produce and manage the much of the content, which is the community’s honey. The Guard Bees are active in the online community, producing content though with a tendency to attack others in the community, particularly the newbies, as some actors are known to do on Wikipedia. The Solitary Bees in an online community consume the content of the community, and although produce a small amount of content, they are not fully active in producing the community’s ‘honey’ like the solitary bee in the real world doesn’t produce any.

Figure 2. A Lifecycle of Economic Behaviour Understanding that the actors of a virtual club economy fit into one of these classes of economic actor can allow the managers of online communities to better develop strategies to maximise the availability of relevant content to club members and increase the participation of those members. These managers, who may be Queen Bees if they actually form part of the community, could ensure that there is an optimal level of inclusion so that the Drones and Solitary Bees that may never contribute to the functioning of the virtual club economy do not use up the club’s facilities more than is necessary so that they control demand for the club’s resources. The dominance of actors can be understood quantitatively, as he found that 90% of the members of online communities are bit players, who read, observe but do not contribute, 9% of users are deuteragonists who contribute from time to time, and 1% are the protagonists, who account for most of the contributions [15,26]. The bit players can be seen to be either Drones or Solitary Bees, the deuteragonists either Guard Bees or Foraging Bees and the protagonists mostly either Foraging Bees or Queen Bees. While this distribution of dominance is the case for most virtual club economies, Nielsen does not make it clear whether it is the optimal level. In some virtual club economies it may not be sustainable for the majority of actors to use the club’s content while not producing any and in others there may be more content being produced than is of value to the members. Managers of online communities need to form strategies of dealing with their stratum so that the availability of relevant content is maximised.

3.4. Know your policies
The cluster analysis showed the importance of developing ground rules to all communities and the relevance of enforcing policies to the communities with the most members. It also showed that those online communities that enforced rules had the most subscribers and that it was more important for rules to be consistent than to evolve. Online communities are often self-regulating and this often requires providers to develop codes of conduct and other policies [27,28]. Communities need policies to direct online behaviour and specifically policies are needed to determine requirements for joining a community, the style of communication among participants, accepted conduct and repercussions for non-conformance [23]. Well-designed


policy statements accompanied by reports on effective enforcement will distinguish some Web sites [29]. As can be seen from Table 1, few of the social networking services investigated gave such reports, although the ones that did had the highest subscriptions. Clear policies can also be important to increasing participation, including with a statement making it clear that contributions are welcome, which can help Lurkers overcome the difficulties they have in posting [30].

3.5. Know your purpose
Evident from the cluster analysis was the role events and rituals played in online communities. Purpose is the basic long-range objective of an organisation and its reason for existing [31]. The purpose of an online community is a major factor in influencing the behaviour of actors in an online community [32]. Virtual club economies that have clearly stated goals appear to attract people with similar circumstances, creating a stable environment where there is less hostility [23]. It could be argued that ultimately the purpose of a virtual club economy is to maximise the availability of club goods to the actors that use the online community through having an optimal number of subscribers. Despite this it is important for every online community to differentiate itself from others and create a unique shared purpose that solidifies the actors’ presences in the virtual club economy. An online community’s purpose can be defined in such a way that it brings meaning to the actors that are members of it, gives it value and consequently stimulates commitment and action [33]. Attempting to break down the ultimate purpose of maximisation reveals five aspects of looking at the goals of online communities that define their purpose. The first being auto-corporate goals. These are the financial and functional goals that ensure the future of the virtual club economy, and can be formed through taking a strategic look at revenue raising aspects of sustaining the community and this is often achieved online through advertising schemes or external investments from individuals hoping for the online community to form part of some concentration in the future. The second of these categories of objectives are the intra-corporate goals. These are the goals that ensure the teams of actors serving the club are sustained so that the club is able to develop its identity and policy frameworks. These first two categories are inward looking and the third, which is the inter-corporate goals, focuses on bridge between the objectives that maintain the club’s existence and those that give it value in the eyes of outsiders. This third category focuses on the goals of the online community in attracting and proving for members and it is these gaols that have formed a core part of many virtual club economies where success has been measured in terms of number of ‘hits’ or levels of ‘post counts’. The final two categories are the externally focussed extra-corporate and sociocorporate.

It has been argued that the consumption of club goods requires optimal exclusion as well as inclusion, although increasing membership appears to be a particular concern for providers of online communities in addition increasing the participation of the membership. Michael Porter has strongly argued that that strategic fit is among many activities that are fundamental not only to competitive advantage but also to the sustainability of that advantage [12]. Applied to online communities, strategic fit can be seen as a means of achieving the optimal level of membership where those included share an interest in the topics of the community, its policies and its purpose and those that do not are excluded. Five strategic principles have been identified for managing virtual club economies, namely that an online community should know its technology, know its subject matter, know its stratum, know its policies and know its purpose. Five categories of goals that can be used to explore the last of these principles, the purpose, are the auto-corporate goals, the intra-corporate and inter-corporate goals and the extra-corporate and socio-corporate goals. If a virtual club economy is able to decide what its goals are in these five categories of objectives then they can develop strategies that ensure competitive advantage and a sustained existence in addition to realising a sense of purpose that while achieving the


ultimate aim of maximising the availability of club goods, also makes participants feel a wider sense of being that maintains their interest in participating in the online community. Understanding these participants, the stratum of the wider virtual economy, and the subject matter that draws them to the club, are also essential to an online community maintaining its competitive advantage. If the managers of a virtual club economy know the interests that hook the members into the club they can better co-ordinate the roles of members and encourage those that produce the best content to participate more frequently. An online community that is able to develop a strategic fit utilising the appropriate technology and content and provide the most appropriate services is more likely to increase its membership to a point where there is an optimal level of inclusion and well as exclusion.

4.1. Limitations and directions for future research
The study carried out a cluster analysis of a dataset collected through evaluating websites on a list made available on Wikipedia. It found there was evidence emerging of five principles for strategically managing online communities. As the list of websites came from Wikipedia it is very likely that there will have been some omissions, which meant the dataset would not have been able to capture a complete picture of online communities, which may limit the ability to generalise the study. Future research could draw from a wider range of social networking services and perhaps segment them based on age, gender, culture, etc to investigate whether the importance of the 5 principles identified differ between market segmentations.

The author would like to acknowledge all those reviewers that provided feedback on earlier drafts of this paper, in particular Mr John Evans, a self-employed Cardiff-based economist, for his helpful comments and suggestions. Glamorgan Blended Learning is a member of the GTi Business Network, which is supported by funding from the University of Glamorgan.

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