What's Inside a Successful Virtual Community Business? The Case of the Internet Chess Club

This paper considers the human and technical components of the business model of a highly successful subscription-based online gaming community, the Internet Chess Club (ICC). After presenting the history of this enterprise and its properties as a research testbed, we review the actors (owners, regular members, volunteers) and the infrastructure to set the stage for a survey (n = 124) of paid subscribers and volunteers to explore participants’ perceptions and their preferred activities inside the community. A principle components factor analysis shows that the respondents can be divided into five subgroups: the Promoters and Community Builders, the Feel-at-Home Comfortable Users, the Addicts, the Socializers, and the Introverted Chess Focus. The success of ICC stems from its support of all of these subgroups, as well as intrinsic factors in its environment that continue to attract volunteers from the regular member corps. Much of ICC’s success that we find in this case follows prescriptive advice from prior virtual community literature, such as improving access to large-scale information resources, facilitating economic transactions, and combating information overload. After discussing the results, we provide directions for further work in this area. A Brief Overview of Virtual Community Business Offerings Virtual Communities (VCs) offer a tantalizing possibility to businesses: to leverage the ubiquitous reach and range of the Internet to locate and gather birds-of-a-feather interest groups, to provide these groups with convenient visual interface tools supporting asynchronous and synchronous group interaction, and to sit back and watch as the nascent groups bootstrap themselves to viability. Early strategy papers, for example (Armstrong and Hagel 1995) touted the vast potential of this new face a business can present to its customers. As the Internet matured in the late 1990s and content differentiated, bandwidth also became more plentiful enabling more ambitious VC offerings. VCs expanded from plain text chatrooms and newsgroups to 3-D gaming worlds. At the same time, numerous prescriptive design papers were written to enunciate principles to assist in the design of VC architecture, with varying degrees of business focus. Kollock (Kollock 1996) stressed the importance of trust via persistent VC identities; this trust can facilitate another recommended feature of a VC business, an economic infrastructure that can carry out transactions. The importance of a recognized ID was supported by a recent empirical study on eBay vendors (Resnick, Zeckhauser et al. 2002) . Millen (Millen 2000) and Marshall et al. (Marshall, Shipman et al. 1995) stressed the importance of designing the VC user base’s software tools with their needs in mind. Williams and Cothrel (Williams and Cothrel 2000) reiterated that the users should have “a critical mass of functionality” at their disposal and that managers should delegate authority as much as possible down the ranks to the members so that they have discernible power to shape the rules of conduct in the VC. They also mentioned the common sense principles of providing user feedback channels, recruiting actively for new members, and the importance of the equity holders to acknowledge the “discretionary energy” (the volunteerism) of the many participants who spend time and effort to keep the community going with timely help for newcomers, and guidance to help members locate internal and external information assets of interest. Virtual Community Businesses and Volunteers The issue of leveraging volunteers is particularly important in VC-based businesses, since the cadre of owners may be quite small yet the Internet reach and range means the VC offering will be global in scope. Volunteers can, for example, provide timely multiGinzberg & Weisband/Inside a Successful Virtual Community Business 2003 — Ninth Americas Conference on Information Systems 387 lingual help or they can assist in more core duties, such as maintaining the infrastructure of an online chat group (Butler, Sproull et al. 2002). What sorts of members can the owners attract into the volunteer workforce? Prior work shows that volunteerism, to some degree, is “prosocial” – an altruistic desire to do good. On the other hand, there is also some degree of selfish motives --personal gain via the volunteer activity, be it recognition from superiors, a possible stepping stone toward a promotion, or some other nonaltriustic rationale (Murnighan, Kim et al. 1993; Penner and Finkelstein 1998; Snyder and Omoto 2001). Putting the Design Principles into Practice: Sustainable Revenue Models Of course, setting forth design principles and actually building and running a successful VC-based business are two separate things entirely. One of the key choices of a nascent VC offering is the identification of the potential revenue streams. Some of the major possibilities are: subscription-based, where members enroll due to the attraction of differentiated content and functionality; ad-hoc based, where visitors can elect at irregular intervals to make a purchase (for example, a pay-per-premium-article news discussion forum), or advertisement-based, where visitors at a VC site, in order to use the functionality, must also view product placements. An example of the latter model is the Yahoo Gaming network. Bughin and Hagel and Bughin and Zeisser (Bughin and Hagel 2000; Bughin and Zeisser 2001) support VC operational performance in a set of limited studies with the caveat that cost-savings is paramount to ensure long-term viability. Based on general prescriptive principles, the business owners must plan a VC offering which: • offers dynamic content and functionality that will attract new members. • once new members are acquired, provides enough attractions in the initial subscription period to have a substantial rate of re-subscription. • offers delegation of governance to further the sense of self-construction of the community’s members. • offers segmentation of the communication channels to combat information overload (Jones and Rafaeli 2000); what this means in practice is that the members are offered a chance to self-elect themselves into sub-groups and to “tune in” to various sub-group channels. • provides persistent IDs to further a sense of belonging (Blanchard and Markus 2002) (Kollock 1996); this belonging adds to the switching cost of leaving this VC and joining a competitor, thus assisting in member retention. • provides the infrastructure to conduct economic transactions. • acknowledges and rewards volunteers. The research gap thus far has been between prescriptive papers and general case studies on one side, and limited VC marketing studies on the other, to address the linkages between VC success, VC design principles, and the nature and deployment of the VC volunteer workforce. To bridge this gap, we conduct an in-depth survey on the Internet Chess Club (ICC), a highly successful subscription-based VC chess and related-game enterprise that currently has over 21,000 paid members and over 5,000 trial members with a low daily operational overhead. The ICC offers a very convenient experimental platform for the researcher to gather data using conventional survey-based means and also via automated means, using an embedded software agent. We have taken advantage of this platform in prior work (Ginsburg 2001; Ginsburg and Weisband 2002); the current paper extends this work with an expanded and updated sample size and new analyses of member and volunteer attitudes. After providing a brief history of the ICC, we describe its key properties and its organizational structure (owners and volunteers). This sets the stage for our survey (n = 124) that canvassed regular member and volunteer opinions. After presenting the results from this survey, we conclude with directions for future work. A Short History of the Internet Chess Club In 1993 and 1994, Daniel Sleator, a Professor of Computer Science at Carnegie Mellon University, was an administrator and systems programmer on a public code base, the Internet Chess Server (ICS). He fundamentally reworked the code base and implemented useful chat features such as “shout” (a broadcast mechanism to shout to all logged on), “whisper” (where observers of a game can talk among themselves, discussing the game in progress, without disturbing the players), and “kibitz” (where observers’ comments are also heard by the players). In 1995, Sleator made the decision to privatize his altered code base, and named the new offering Internet Chess Club (ICC). He established ICC on a subscription basis in early 1995 and in the first quarter of 1995, had 223 paying members (at $49/year/adult; $29/year/student). The public code, which only offers a subset of