Page 296 - Electronic Commerce

Social Networking, Mobile Commerce, and Online Auctions

online and discuss issues, share information, generate ideas, and develop valuable
relationships.
As you learned in earlier chapters, the Internet reduces transaction costs in value
chains and offers an efficient means of communication to anyone with an Internet
connection. Combining the Internet’s transaction cost-reduction potential with its role as
a facilitator of communication among people has led companies to develop new ways of
making money on the Web by serving as relationship facilitators.
This section begins with a brief history of online communities and then outlines how
companies today engage in social networking activities that promote relationships among 271
site visitors and businesses.

Virtual Communities
A virtual community,also calleda Web community or an online community, is a gathering
place for people and businesses that does not have a physical existence. Howard Rheingold
described the characteristics of these communities in his 1993 book, The Virtual
Community, which is widely recognized as the definitive book on the subject. Virtual
communities began online even before the Internet was in general use. Bulletin board
systems (BBSs) were computers that allowed users to connect using dial-up connections
through telephone lines to read and post messages in a common discussion forum that
resembled an electronic version of a physical bulletin board. BBSs often hosted discussions
on specific topics or issues related to specific geographic regions. Although many BBSs were
free, some charged a monthly membership fee. Other discussion board services followed,
provided by commercial enterprises such as CompuServ, Prodigy, and GEnie. These
companies generated revenue by charging a monthly fee and selling advertising.
Usenet newsgroups were another early form of virtual community. Started at Duke
University in 1979, Usenet was a set of interconnected computers devoted to storing
information on specific topics. Usenet newsgroups were message posting areas on those
computers in which interested persons (primarily from the education and research
communities) could discuss those topics.
In the mid-1990s, virtual communities formed in Web chat rooms and sites devoted
to specific topics or the general exchange of information. As the bandwidths available to
Internet users increased, photos and video became commonplace additions to the
discussions in these communities.
The social interaction in virtual communities was substantial and many sociologists
believe that the communication and relationship-forming activities that occur online are
similar to those that occur in physical communities. The rest of this section describes the
evolution of these early virtual communities into the Web sites that people use today to
form and maintain relationships online.

Early Web Communities
One of the first Web communities was the WELL. The WELL, which is an acronym for
“whole earth ’lectronic link,” predates the Web. It began in 1985 as a series of BBS dialogs

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