Feb 23, 2007

To monetise or not : lessons from chess

In a recent column for Campaign, Russell Davies writes that the difference between the previous dotcom boom and the current one is the seeming indifference of current digital media startup brands towards monetisation. Which is why, he concludes, the incumbent media owners will have to figure out how to compete with someone who's happy working for free - or for comparatively little.

In line with Russell's point that people who are talking about monetisation now are those that don't get it, this current fashionable point of view holds that we may have finally reversed capitalism. The new 'with-it' breed of companies are willingly embracing the small is beautiful outlook - small payroll, small profits, small VC funding, etc.

I think something a little more complicated than that is happening. And to illustrate it, I will draw upon the game of chess.

There are two kinds of advantages you can hold in a game of chess - material or positional. Material advantage is holding more pieces than your opponent (having captured more pieces or lost fewer due to blunders.) And material advantage will almost always lead to a win (ie., in the hands of a competent player.)

Positional advantage is a bit more tricky. It's an advantage gained out of the relative positions of pieces on the board. Though positional advantage is ultimately intangible, in the hands of an expert player any positional advantage will eventually convert into a material advantage (which will lead to a win.) Which is why the better chess players play gambits - willingly sacrificing material pieces to gain much more positional influence.

Playing with positional advantage is tricky also because the lead you hold is vaporous. If the player who holds it doesn't continue to play the right moves, it vanishes into thin air - it is less persistent than material advantage. Which is why, the common advice for average chess players is to convert any positional advantage they have to a material one as soon as possible.

But the better, and truly great, chess players often ignore that rule. Secure and confident that they will play only the right moves in the game ahead, they carry and build on this intangible advantage and press ahead - and chase victory and greatness.

Needless to say, when chess began in its modern avatar, all players played for material advantage - in a swashbuckling style reminiscent of the time. It's only later that chess theorists and players figured out the concept of positional influence. But positional thinking didn't mean that the object of the game had changed. It merely recognised that when the other player is also competent enough to keep an eye on material gained and lost, other kinds of advantage have to be sought.

I think what's happening in the digital media marketplace is similar. The early players were the swashbuckling types - playing without any knowledge of the reputation economy (the corresponding equivalent of positional influence.) But as the market matured, the better players have taken the game forward and begun to play for positional advantage, knowing fully well that 'monetise and run' tactics will not work as well - or will not take them to their goals.

And what of those guys who don't get it and who are speaking of monetisation currently? These are the not so experienced players who have eked out a positional advantage but aren't quite sure they are skilled enough to hold it. They are taking the advice given to an average chess player - convert your reputation into money soon, because it may not last.

To conclude, just because the digital media marketplace is mature enough to told more than one form of interchangeable currency - money and reputation - it doesn't quite mean the object of the game has changed. On the contrary it has only become more strategic, layered and finally interesting to watch.
About the author:
Iqbal Mohammed is Head of Innovation & Strategy at a digital innovation agency serving the DACH and wider European markets. He is the winner of the WPP Atticus Award for Best Original Published Writing in Marketing & Communication.
You can reach him via email or Twitter.


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