Mashable - The Social Media Guide - Latest Comments in The Screw You Coefficient

Re: The Screw You Coefficient

Facey Spacey Development — Sat, 12 Apr 2008 14:56:35 -0000

Adam,

Great equation...the only thing missing is if the new features lead to new visitors that love them. And I think that is also the point of new features: not to just make each user view more pages, but to get new users.

I don' think it messes up the scope of what you're trying to say at all. You could probably make a new equation that says the same thing, which is essentially that such companies don't care about [current] users. They care about new users and their ARPU.

It would be nice to see you make an equation for this variant. And maybe 2 equations: 1 where ARPU + number of new users increases; & one where ARPU stays the same, but # of new users goes up because of the new features. You already have where ARPU goes up but no new users are added....And actually, sorry, I'm wrong: you don't need 2 or 3 equations--you need just one equation with 3 different examples (well maybe, 6 to show when it fails). You get the point.

James
from
FaceySpacey.com - "The Startup Incubator"

Re: The Screw You Coefficient

Max — Sat, 12 Apr 2008 13:50:07 -0000

Interesting post.

Re: The Screw You Coefficient

Adam Ostrow — Sat, 12 Apr 2008 12:45:37 -0000

yes, we have the "screw you efficient" formula posted on a huge banner in our office, lol :-)

thanks for the compliments though, glad you're enjoying our content.

Re: The Screw You Coefficient

Adam Ostrow — Sat, 12 Apr 2008 12:44:22 -0000

Yea, totally hypothetical numbers just for an example. However, $20CPMs aren't uncommon now for certain publishers in a very specific niche.

Re: The Screw You Coefficient

chrisco — Sat, 12 Apr 2008 10:13:59 -0000

$0.02 per page view? $20 CPM? Seems a little high. I think it's well under $1.00 CPM for most of these sites.

Re: The Screw You Coefficient

Jo — Sat, 12 Apr 2008 08:23:44 -0000

Pardon my ignorance, but if that is the revenue formula, why would a business think in any other terms?

The issue is the sunk-cost for the people who joined and are now longer happy with the formula. They may or may not offer an opportunity for another venture.

What is more interesting, to me at least, is that 2.0 companies seem to have an effective shelf-life of 2 years. The agility required to identify an opportunity, get the relevant people and capital together, make an application, develop a community etc. is breathtaking - breath stealing.

The management skills to do this are not generally available. Those of us in university teaching and management training need to lift our game - quite a lot.

Re: The Screw You Coefficient

Jeremy — Fri, 11 Apr 2008 18:29:56 -0000

Big, cheesy grin here - I see you guys have tripled the number of ads on this site in the last year or so since I started reading.

:) Gotta pay the bills somehow, right?

In your case, though, there are only a few real "competitors" that have as much newsworthy, up to the minute, quality content...if & when it changes though, then I'd expect your ads to detract some from your marketshare. :)

Until then, though, I think you guys are doing the right thing - and it's still reasonably easy to read the posts in the middle, as I never "see" the ads that way.

Re: The Screw You Coefficient

Mia — Fri, 11 Apr 2008 16:57:24 -0000

Great post!
I am skeptical that much thinking goes into these decisions but I am sure they use something similar to what you've suggested. Even if we assume that the go/no-go decision is made before the actual feature launch, these numbers are purely guesstimates aka half-a**ed guesses unless the company spends $$ on diligent user research combined with beta testing. But come on, let's get real here, how many Internet companies do that? Testing takes time, money, and there's an opportunity cost involved. As long as the powers-that-be agree that it's not going to break the company and if we don't do it, someone else will, they'll go for it.
I agree with Bill, your formula should also include new users acquired due to the new feature. And let's not forget the indirect impact of all the 'publicity' the crappy new feature generates :)

Re: The Screw You Coefficient

modemlooper — Fri, 11 Apr 2008 16:44:20 -0000

Totally agree.

Re: The Screw You Coefficient

Darrel Girardier — Fri, 11 Apr 2008 16:38:11 -0000

What companies seem to forget is that by adding on all these new features you begin lose focus on the companies core competency. Sure one or two new features isn't bad, but once you begin to pile them on left and right your brand value and name will greatly diminish.

Re: The Screw You Coefficient

Bill Adel — Fri, 11 Apr 2008 16:02:41 -0000

What about new users due to a new feature?
Not only new ones that come to the service, but with Flickr, don't you have to be a Flickr Pro user to even get video uploading?

Re: The Screw You Coefficient

Ontario Emperor — Fri, 11 Apr 2008 15:22:10 -0000

Good formula, which can also be extrapolated to other areas - for example, bands that "sell out" and no longer play in the intimate clubs where they used to perform, and no longer play the rough songs that they used to place.

It's important to remember, however, that users aren't the only constituency to which companies must answer. In fact, companies take more time to respond to "the funders" (either stockholders or venture capitalists). Using Starbucks as an example, I previously argued that Starbucks should differentiate themselves from McDonalds and serve their core constituency. I subsequently reconsidered, noting that Starbucks' stockholders expect to see continued growth, and therefore WANT Starbucks to increase sales by attracting the McDonalds PlayPlace crowd.

The same thing applies to Flickr video. If Flickr is still a very good picture site a few years from now, "the funders" will consider it a failure, because "the funders" demand ever-expanding growth.

Re: The Screw You Coefficient

Most Beautiful Woman in The Un — Fri, 11 Apr 2008 15:00:18 -0000

You are wrong - Digg users LOVE the social features....

Look at how much power being a Top Member has on Diggs. Some of them have many hundreds of 'Friends'

Kevin has 'Thousands'

As far as Flickr and video

This is a perfect way to bring life to an interesting photograph

The photograph is only a moment in time - having a video that expands on the scenario, adds even more dimension to it - as well as credibility