Mobile Social Media and Museum Business Models

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Presentation at Tate Handheld conference 7 September 2010.

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  • Subtitle: All the girls are doing it. Because museums are hoping that soon all the girls and boys will be bringing their smartphones (perhaps preferably iPhones with matching Armani suits)…And we hope they’re going to do this because it will save museums money on their mobile programs.
  • It saves platform & on-site operations, but adds other costs: We may have changed platform providers – gone from a proprietary audio tour system to a proprietary app-authoring system, for example, but I don’t think the bottom line is going to be very different. On the other hand, what museums are doing a lot more of is à la carte purchasing of the elements of their mobile mix; this has and is still in the process of radically changing mobile vendors’ business, and of course has led to many new entrants in the market, some of whom you’ll get a chance to meet here today.
  • Making money off of mobile is not easy; even the pros are struggling:On 20 Aug 2010, not long after Wired Magazine declared the web dead and backed apps and other ‘offline’ products as the third generation Internet, Fast Company’s Aaron Shapiro wrote: Apple CEO Steve Jobs has said, the App Store has generated more than $1 billion in revenue for developers. That sounds like a big number. But… One billion dollars in revenue for the approximately 225,000 apps is $4,444 per app--significantly less than an app costs to develop. …A typical iPhone app costs $35,000 to develop. The median paid app earns $682 per year after Apple takes its cut. With these calculations for the typical paid app, it takes 51 years to break even. It's not any better for free apps. A free app also costs about $35,000 to develop. But there are so many free iPhone apps that at a rate of 2 second per app, it would take approximately 34 hours for someone to check out each one. That's not great odds for a revenue model based on advertising.
  • To this challenge, add the business constraints under which museums operate: they would daunt even the most seasoned entrepreneur. But knowing them helps us determine what are the appropriate metrics against which we should measure our business, including mobile activities: Quality, Relevance & SustainabilityQuality & relevance very closely connected of course; as Chris Anderson has said, “in the eye of the beholder”. But what distinguishes museum social media is that it has at the core the museum’s mandate to collect, conserve, interpret and share the finest exemplars of human history, creativity, and ingenuity – so I think the question of quality inevitably pervades all we do, and rightly so.But I strongly doubt that any of these is going to put museums, which Max Anderson has called red ink business, in the black. The reality for museums is that they are shaped by business imperatives that would probably confound even the most experienced and insightful business manager. Their stock in trade is by definition Invaluable, so impossible to capitalizeTheir mission is to serve the public good, so they have to achieve the widest possible reach and relevance, regardless of individuals’ means to help pay for this serviceAnd they have to do this forever: in other words, their business, like their collections, must be sustainabie indefinitelyMax Anderson, Prescriptions for Art Museums in the Decade Ahead,CURATOR,The Museum Journal,Volume 50 • Number 1January 2007
  • So these are the metrics we should keep in mind as we consider the new and emerging business models on offer as a result of the new mobile platforms:(Will discuss subs at the end if there is time: bonus slide for vendors!)Mobile metrics and datamining mobile users’ content-based activities tells us more about our audiences in a non-intrusive way. This greater understanding of whom we’re serving and what they’re interested in – where and when – can make sponsorship of exhibitions, events and event mobile products that reach those audiences more valuable because sponsors can be more certain that they are reaching their target audience.
  • And there’s one more we ended up brainstorming in yesterday’s workshop, which I’ll call ‘non-profit network effects’. Network effect businesses are ones in which the product or service becomes more valuable to the end-user the more users there are of it. Telephones and fax machines are the classic examples, along with email and all the social media platforms. Just as you’re not going to need a fax machine if no one else has one, nor are you likely to use Facebook until a critical mass of your friends are using it. On the other hand, they are perfect distributed network models: they get smarter and more powerful the more they are used.Museums can use mobile social media to create a network of conversations and value around the museum’s collections, exhibitions and events that can support other revenue activities. In this model, mobile’s value for museums lies more in providing marketing support for other products and activities that are paid, than in generating revenue directly. So rather than selling the mobile product, design it to leverage social media and give it away for free: the social media functionality acts as a multiplier on the size of the audience reached, making the free product a marketing and outreach engine.
  • Creating a network means going beyond the hub & spoke model: broadcasting one one message out from the center and striving to add more spokes to the wheel. On the fixed web this is called brochureware, otherwise known as Web 1.0.
  • It also goes beyond simply adding twitter,fb and ‘email this’ functionality to our mobile programs. Retweets and fb posts can extend the reach of the museum’s message, but they do not fundamentally change the model.
  • Museum Mobile 2.0 should do more than this: it should leverage social media to listen and receive as much as it lectures and transmits. It should connect people with the things they find meaningful, and also the people who share those interests.
  • And ultimately become part of a vast, 3D rhizome which, like the Internet, becomes almost self-sustaining because it’s impossible to eradicate from any single central point. Here are some examples of projects that I think satisfy our metrics of quality, relevance, and sustainability. Will put full functionality list on wiki.
  • New and meaningful ways of connecting with collections (not just fun for fun’s sake: does not put us into a metric more appropriately used to judge entertainment businesses). Crowdsourcing of geodata would also be a good example: Do meaningful work
  • Gives audiences a stake in our collections and activities: Makes audiences both artists and collectors/curators.Kew also planning data mining of what content is accessed where: will feed back into quality metric, enabling them to improve content.
  • Connecting people to people: help communities of interest form around objects/exhibits; facilitates the conversationEncourage forums, citizen scientists/curators, communities of interest
  • In closing, here are some of the revenue possibilities; subscriptions.And when we finally make money off of these, then there’ll be free beer for everyone – tomorrow!http://marketinghackz.com/5-reasons-to-adopt-a-freemium-model-to-succeed/
  • Mobile Social Media and Museum Business Models

    1. 1. Mobile Social Media<br />& The Business of Museums<br />Tate Handheld Conference 2010<br />6-7 September 2010 Nancy Proctor proctorn@si.edu<br />
    2. 2.
    3. 3. The Costs of Mobile<br /><ul><li>Platform
    4. 4. Minutes
    5. 5. Text messages</li></ul>Rev shares: 30% to Apple, n% to platform provider<br /><ul><li>On-site infrastructure
    6. 6. Project management & staff time
    7. 7. Content, include licensing of assets
    8. 8. Marketing
    9. 9. Interface design
    10. 10. Development (app/mobile website)
    11. 11. Software: CMS, statistics, distribution
    12. 12. For-fee services (or staff time)
    13. 13. SaaS
    14. 14. Players, charging racks, headsets, lanyards
    15. 15. Software: statistics, distribution
    16. 16. Operations staff
    17. 17. Opensource platform</li></ul>+ Free Marketing (off-site)<br />+ MAINTENANCE<br />
    18. 18. Apps don't generate profit for developers. <br />Apple CEO Steve Jobs has said, the App Store has generated more than $1 billion in revenue for developers. That sounds like a big number. But… One billion dollars in revenue for the approximately 225,000 apps is $4,444 per app--significantly less than an app costs to develop. …A typical iPhone app costs $35,000 to develop. The median paid app earns $682 per year after Apple takes its cut. With these calculations for the typical paid app, it takes 51 years to break even. It's not any better for free apps. A free app also costs about $35,000 to develop. But there are so many free iPhone apps that at a rate of 2 second per app, it would take approximately 34 hours for someone to check out each one. That's not great odds for a revenue model based on advertising. <br />http://www.fastcompany.com/1684020/the-great-app-bubble<br />
    19. 19. Museum Metrics & Constraints<br />Invaluable = highest possible quality<br />Public good = relevance & service for all<br />Forever business = must be sustainable<br />
    20. 20. Business Models<br />Cost to end user<br />Rental (on-site; usu. revenue share)<br />Digital retail (app/download)<br />Freemium (e.g. in-app sales)<br />Donations (e.g. by text message)<br />Subscription (in discussion…)<br />Free to end user<br />Loss leader/mission imperative<br />Sponsorship<br />Ad-supported<br />Monetize data<br />
    21. 21. Non-profit network effects<br />Edward Hoover, 2010, from Flickr.<br />
    22. 22.
    23. 23.
    24. 24.
    25. 25. Edward Hoover, 2010, from Flickr.<br />
    26. 26. 1. Quality<br />Tate Trumps<br />EGO-TRAP: Anne Kahr-Højland<br />
    27. 27. 2. Relevance<br />http://stedelijk.medialab.hva.nl/<br />
    28. 28. 3. Sustainability<br />http://www.si.edu/<br />commons<br />http://www.gipuzkoa2.net/<br />
    29. 29. 4. Revenues<br />Exhibition apps<br />Freemium content to support the (free) experiences<br />Micropayments<br />Microdonations<br />Sponsorship & advertising<br />Datamining<br />Paid games<br />eCatalogues & subs…<br />

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