These days, when almost every website offers social features, a burning question is: What is the business value of users’ “likes” and “shares?” Past attempts at finding the answer have touched on the idea of user engagement, suggesting that users who are more socially active on a site continue to browse and explore it for longer periods of time, contribute more content, and communicate more about the website with others, potentially attracting new users.
Our research in the last five years hints at a more concrete relationship between user engagement and website profitability: Social activity on a website can increase users’ commitment to the site and willingness to pay for its services. Our work suggests that social engagement could actually be used to solve the conversion challenge that so many content websites encounter, in which users enjoy free content that the website provides but are unwilling to contribute to the site monetarily.
The bad news is that it’s not enough to just add participatory options and hope that users will click and interact. To see any real economic benefit from user engagement, a website has to have a clear strategy in place. Our research introduces the concept of the ladder of participation — a framework for strategic thinking about using site engagement to improve conversion. The notion of the ladder is based on the idea that, as users become increasingly engaged with a website, they become more willing to pay for its services — and the website must take an active approach to engage and interact with its users, guiding them “up the ladder.” To do this, website managers must understand the current user community, identify how they would like that community to evolve, and select the participatory features they offer — and the order of their introduction — accordingly.
We empirically demonstrated the relationships between a user’s position on the ladder of participation and his or her willingness to pay, using data on more than 100,000 users from Last.fm. Last.fm is a music-streaming website with social features that enable users to interact with the content on the site and with one another.