Trust is always important in business, but it is fundamental to Web 2.0 in a way that it wasn't to earlier Internet businesses.

December 12, 2006
URL:http://drdobbs.com/web-development/web-20-and-the-engineering-of-trust/196603505

In 2005, Rupert Murdoch bought the marquee Web 2.0 business MySpace for $580 million. A year later, the price for a piece of settled Web 2.0 real estate had apparently tripled, as Google paid $1.65 billion for YouTube.

The fact that, in response to legal challenges that seem to bring into question the viability and even legality of the whole YouTube video-sharing business model, YouTube immediately began shutting down a large number of its video feeds, well, that has to raise some questions about the wisdom of the Google-YouTube deal, as well as of the whole Web 2.0 phenomenon. And the fact that one of the YouTube challenges came from Comedy Central, which has benefited greatly from the viral video phenomenon that is YouTube, puts yet another weird twist in the economics and sociology of Web 2.0.

Shall we also mention that the staid news service Reuters has set up a bureau office in the Web 2.0 virtual world Second Life, and is paying to staff it and to rent (or is it lease?) office space in that virtual world? Or that Sun Microsystems chose Second Life as the venue for a recent press conference? Or that Web 2.0 venture Digg is being called the "new Slashdot," or that—here's a scary thought—Web 2.0 venture Wikipedia, a user-editable encyclopedia, is often the first and sometimes the only place many people look for information on—pretty much anything?

You Know You're a Web 2.0 Business If...

These are just a few recent blips on the Web 2.0 radar screen, but perhaps they make the point that Web 2.0 is catching the imagination of present-day Web denizens in a big way, at the same time as they demonstrate that the Web 2.0 concept is a little confusing. In a recent oreillynet.com article, Tim O'Reilly tried to clear up some of that confusion by presenting a "meme map" of over a dozen attributes (symptoms?) of Web 2.0-ness, including such memes as architecture of participation, users as contributors, functions not predetermined but emerging from use, getting better as more users use it, harnessing of collective intelligence, trust of and amongst users, sharing reviews and opinions and contacts, tagging, and reputation. Ultimately, Tim's brave effort still leaves Web 2.0 a very porous concept.

But an important one. We'll focus here on a more close-knit topic and its role in Web 2.0 ventures—trust. Trust is always important in business, but it is basic to all these Web 2.0 projects in a way that it wasn't to earlier Internet businesses. And not all Web 2.0 ventures are alike: The way in which trust matters in Web 2.0 ventures differs for different kinds of business models. Then there's the matter of the engineering of trust, which is hardly a new idea, but deserves particular attention in the development of Web 2.0 enterprises.

It's not surprising that trust should be so important in Web 2.0 ventures, because most of Web 2.0 seems to be about the development of online communities. Jon Udell said recently, "The Web began as, and keeps proving to be, an experience that's more about social interaction than passive entertainment." Web 2.0 companies are, by and large, those that embrace this idea of social interaction at their cores.

We need some more examples to clarify what we're talking about. One thing that complicates the Web 2.0 concept, though, is that in talking about it, you really can't leave out 1.0-generation businesses like eBay and Amazon. But the kind of businesses we're talking about here include businesses explicitly built around models that are richly social: MySpace, Facebook, Friendster, and virtual worlds like Second Life, Active Worlds, and Entropia. We're also talking about media-centric ventures such as YouTube, Flickr, NetFlix, MusicMatch, and PhotoBucket, which depend wholly on user contributions or build value from user ratings or recommendations. These ventures call to mind early peer-to-peer music-sharing systems, but somehow avoid most (if not all) of the controversy and threats of legal action. In all cases, there seems to be a community at the heart of the business model.

The Sociology of Web 2.0

It's important to realize that these ventures are not all examples of the same thing. There are differences that run deep, both in the nuts and bolts of the businesses/sites/services—technology, function, and the like—and in the social structure of the community they are built around.

The social aspects of these communities, such as how they are constituted, the degree to which values are shared among members, the sharing of interests, the demographics of group membership and openness of membership, all have implications for the type of technology that will work and the uses to which the site/service can be put. It may actually be useful or necessary to know something about sociology or social psychology, or at least have good intuitions about these fields, to build successful Web 2.0 sites and services.

Maybe one can get by with freshman sociology concepts like "Gemeinschaft" and "Gesellschaft." According to Wikipedia (hey, we all do it), German sociologist Ferdinand Tonnies intended these terms to describe ideal types of social structures, and assumed that actual social structures would only approximate their characteristics. But the distinction the terms draw seems useful for sorting out different kinds of Web 2.0 businesses on the basis of their social structures.

"Gemeinschaft (often translated as community) is an association in which individuals are oriented to the large association as much if not more than to their own self-interest. Furthermore, individuals in Gemeinschaft are regulated by common mores, or beliefs about the appropriate behavior and responsibility of members of the association, to each other, and to the association at large..."

Gesellschaft (often translated as society or civil society or "association"), in contrast, describes associations in which, for the individual, the larger association never takes on more importance than individual self interest, and lacks the same level of shared mores. Gesellschaft is maintained through individuals acting in their own self interest. A modern business is a good example..."

Trust operates differently in these two models. In the Gemeinschaft model, trust may flow naturally from the common values of the members, while in the Gesellschaft model, it may be necessary to build-in mechanisms to justify trust.

Trust Never Sleeps

But let's return to the world of software and look at some of the complex ways in which trust comes into play in Web 2.0 businesses.

Trust is very immediate in the ventures that are all about building a community. Members trust that the person who seems to be a 14-year-old girl is a 14-year-old girl.

Trust is essential in monetary transactions and technologies for ensuring that kind of trust are well established. But when a Web 2.0 business embodies its own economy, as Second Life does, it needs some sort of gold standard to justify trust in its currency and business transactions. Business transactions, whether carried out in Eurobucks or Second Life's Lindner Dollars, live in a less trusting, more Gesellschaft world.

Highly focused online communities like Daily Kos, the biggest political site on the Web, are more like the Gemeinschaft model. Trust among members comes more readily, and conversations assume many shared values. Businesses, like Reuters, are opening in Second Life, but they are having to learn how to behave. Early on, they could get away with cute cartoon avatars, but now they have to adapt to the prevailing mores: Advertising and commercial self-promotion are accepted, but only if done in a way that reflects the standards and style of the community.

In probably all Web 2.0 businesses, but especially in media-centric ones, recommendations are a means of adding a layer of value to the interactions. Celebrity playlists, Amazon customer reviews, and eBay's rating of sellers are different kinds of recommendation systems. But note how they differ: One provides a list of product recommendations from a presumably trusted source, one provides many random richly detailed reviews of one product, and the third accumulates random ratings to produce a score.

What about reviewers of reviewers? An article posted on Digg can accumulate a lot of "diggs" (recommendations), which just means that it's popular, not that it's accurate. But Digg also lets recommenders recommend recommenders. Does this layering of one recommendation system on top of another cause something better than any of the individuals' opinions to emerge?

In part because of the value of others' opinions, social connectivity itself can have value. LinkedIn is a business social bookmarking service that lets you tie into the contacts of your contacts. One of the benefits of this, apparently, is the ability to see a potential sales prospect in a social context, providing a richer picture of a person you've only met online.

For true Gemeinschaft models, enabling trust may be no more than a matter of keeping people out who aren't on the same page through trollrating and unrecommending, and in extreme cases, outright banning.

One Million Dollars

For Gesellschaft models, the techniques for engineering trust are more complicated: Google's PageRank algorithm. The algorithm Digg uses for ratings. The NetFlix recommendation algorithm.

This last one demonstrates how important this stuff is. NetFlix munges customer ratings of movies to come up with movie recommendations. It's the same kind of thing Amazon does when it tries to tell you that, based on your past purchases, you might be interested in Marc Levinson's The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. The algorithm doesn't always work well.

Which is why NetFlix is offering the NetFlix Challenge: A $1 million prize to anyone who can improve their algorithm by 10 percent.

The builders of Wikipedia took the gamble that opening their content to public editing could give them the world's best encyclopedia. The jury is not yet in, but the evidence seems to be that the concept is almost right, but needs a little tweaking to protect against abuse.

After getting the algorithms right, perhaps, and finding the right community, abuse of trust is the big issue for many Web 2.0 ventures. Wikipedia had its bogus entries, a California politician found that he had some unsavory "friends" he'd never met on his MySpace page, those folks at Daily Kos tried an experiment in Googlebombing just before the election, Second Life has (and needs) its virtual police. But many of the problems of abuse of trust experienced by Web 2.0 ventures and the members of their communities probably have technological solutions.

Then there's the matter of trust between Web 2.0 ventures and your opportunity to make money off this phenomenon.

The COO of MySpace got quite testy recently about other people leveraging off MySpace's strengths. Other Web 2.0 ventures are more embracing of such actions. According to Tim O'Reilly, the ability to leverage off these ventures, in the form of creating alternate interfaces or creating new services by linking services of different Web 2.0 ventures, is part of what Web 2.0 is. Digg generates previews of YouTube videos; integrating Google maps into other apps is a biggie now; JotSpot, a Wiki business just gobbled up by Google, has or had a network of developers who were customizing and extending JotSpot's services.

The ability to leverage the services of different Web 2.0 ventures could provide a lot of opportunities for developers to create clever new tools. And if that doesn't work out, there's always the NetFlix Challenge.

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