Friday, March 09, 2012

Innovation in Social Recommendation Systems

Do you know anyone who has so much expertise in a particular domain that you would trust their recommendations without feeling any need to do research of your own? In fashion? In music? Phones/tablets? Cars?

Here is the business model (article in Entrepreneur magazine March 2012 edition will be available online March 17). The trusted experts create an online portfolio of products that they can continually curate depending on how fast the domain changes. If they are a music expert, they might keep adding to their "music collection". If they are smart phone experts, they might delete the old ones as the add the new ones. For cars, perhaps they have specific recommendations for different kinds of friends (families, singles, price ranges, etc). The idea is that they create this portfolio on a special web site designed for this purpose ( and each item is linked to the company that sells it. They can link through Facebook, Twitter, or LinkedIn so that their connections can see their “clothes closet” or “driveway.” They don’t actually have to own the product, just find it worthy of their personal recommendation. If any of their friends purchases the item, the friend-expert gets a cut, StyleOwner gets a cut, and the store gets the rest. 

This business model relies on the friend-friend relationship. It takes trust because if they see the recommendation, do independent research, and then go directly to the store, StyleOwner gets zilch and the friend-expert just gets a thank you. The trust has to be so strong that you are willing to buy it just because of the recommendation and do it right there and then. Are there friends you trust that much? For wine? Movies? Restaurant reservations? The possibilities are endless, but only if there are product categories where trust is all that you need.  Having a central location to put them all is helpful, but no guarantee of success.

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