Znetlady: Modern Media

Zopa: When Consumers Control the Money Supply

“Imagine all the people
Living life in peace
Lending to and borrowing from each other freely
Oooh-hoo-hoo-hoo-hoo
You may say that we’re dreamers
But we know how greedy financial institutions are
We hope some day you’ll join us
In a world of better APR”

That’s Zopa’s message to those visitors who deem themselves idealists. They have one for you too, whether you are a worrier, con-artist, control freak, or someone who thinks finance is boring.

Zopa is anything but boring. It is taking on the most powerful force in human society - economic power.

In case you haven’t yet read about Zopa, it is most vividly described as “an eBay for money.” In other words, it is a marketplace where private lenders and private borrowers meet, find a “zone of possible agreement” (zopa), and consummate the transaction. Members of Zopa lend and borrow within the network. No banks, no middlemen.

Even if they won’t admit it, it has financial institutions a little nervous. The first sign: they are coming out with strong warnings to consumers to be very afraid.

The founders of Zopa began with the philosophy that 99% of people are trustworthy, but Zopa isn’t slack. Borrowers are rated by the same credit agencies all financial institutions use, and must produce 6 different forms of ID. Lenders set interest rates themselves, and Zopa gets a 1% fee up front from the borrowers. All lending is across groups of at least 50, so no one lender assumes all the risk for any loan. Maximum exposure for a lender is 200 British pounds. All contracts are legally binding, and if a borrower defaults, collection agencies will come calling.

It isn’t the concept of community lending that is fascinating. After all, family and friends have been lending and borrowing before there was money. No. Zopa signals far more significant shifts.

Most obvious and far reaching is the potential of putting finances into the hands of “consumers” rather than institutions. Conceivably, Zopa, and the inevitable look-alikes, will erode the most powerful force in society – the control of the money supply. If you think the Internet has shifted information power to the people, think about the dramatic change in dynamics when consumers hold significant control over the money supply.

“Zopa is an idea, not a company,” say founders Richard Duvall and James Alexander. Zopa members are, according to Duvall and Alexander, excited about the idea of being able to lend to specific groups of people – teachers or nurses that couldn’t afford conventional lending for a house, or perhaps to a community housing development, or other specific need as seen as by the members of the Zopa network. Now, how will that shift political systems and community systems?

Secondarily, this type of network may drive new “online reputation” systems. Today, we rank sellers on eBay, music, books, blog and web site popularity. Will something like Zopa also move our reputations into a far more public space? For example, right now, if you default on your Zopa loan, Zopa refers you to a collection agency, and your credit report gets dinged, but that ding only shows up on private rating systems – credit reporting databases. Will this bring about new types of “public reputations” within networks, and along with it new degrees of “self-regulation” and accountability? It isn’t a stretch to see a borrower ranking feature crop up, similar to eBay’s seller rating.

Without doubt, Zopa will leapfrog over our stagnant 15th century banking system in a very short period of time. Performance is the primary ingredient, and Zopa will have to deliver it, but this holds all the elements of innovation that could rock the foundations of long-standing institutions and power-bases. Zopa could be the tip of an iceberg as we increasingly operate in and depend upon social networks.

Look deeply.

Modern Media Primer: What is a Blog?

The simplest explanation of a weblog (blog) is a personal, topical webpage that is frequently updated. Personal websites are not new, but what make blogs so powerful are their social nature, their organic, populist culture, and their immediacy. They have become so popular so quickly because very inexpensive, or even free online publishing services make it possible for anyone to publish on the web without having to learn any programming. At the time of this writing, approximately 5 million active blogs are being tracked by blog search engines.

Features of a Blog:
A set of common format features characterize blogs, setting them apart from a typical web page, although the author controls which of these features to make available on their own blog.

Posts: A single blog entry is called a post. Posts are usually short, conversational and are time stamped, displayed with the newest post on top. Blogs are normally organized around a particular topic, so grouped together posts become a reverse-chronology of thoughts, opinions, news, or shared experiences. Time-stamps impart both a sense of immediacy and reader-author connectedness. It also indicates the “freshness” of the content. Blogging etiquette strongly encourages hyperlinking within posts to companies, bloggers, information or articles referred to in the post.

Syndication/RSS: RSS stands for “Really Simple Syndication.” This is often referred to as the “killer app” for blogs, as it allows readers to subscribe to an automatic “feed” of a blog, so that the entire post (or just its headline) is “pushed” to the subscriber as soon as a post is published to that blog. Subscribers receive post content through software integrated into their standard web browser or through a separate application called a “news reader” or “news aggregator.” Each RSS feed contains a link to the blog post on the subscribed blog. This same technology enables blog content to be distributed or aggregated onto web sites, much like a traditional syndicated news story is distributed to subscriber publications.

Comments: Each post invites readers to comment via a small web form immediately under the post. Comments are published immediately and automatically directly under the post, usually with the commentator’s name linked back to his or her own blog. Subsequent readers can read both the author’s posts and the opinions of any reader, as well as follow the link to the commentator’s blog. The author is notified when a comment is posted. The author may post a response comment as well, or post an additional blog entry – and thus the conversation becomes interconnected.

Trackbacks: Trackbacks extend the interconnectedness of blogs exponentially. Authors who allow trackbacks provide a method for another blogger to publish a post directly onto that author’s blog. A trackback is a link to the original author’s post, entered into the second author’s own blog post. When the second author publishes his or her post it is also published in the original author’s blog, directly beneath the referenced post. The original author is notified when a trackback is published. Trackbacks are interlinked to and from each blog, intertwining multiple blogs and conversations.

Permalinks: Each post, upon being published, is automatically given a “permalink” which is a permanent URL for that individual post. These are helpful because most bloggers keep 1 – 10 of their most recent posts on their blog “home page” and older blog entries are “archived” off the home page. Permalinks ensure the integrity of hyperlinks, as anyone can create a link to an individual post in any web page, blog or email, and it always remains accurate and unbroken. Permalinks also help get your posts noticed by search engines, since each post has a unique web address.

BlogRoll: Many blogs contain a list of other blogs the author reads and recommends, with links to each. Some bloggers also list books, publications, music or services they recommend.

Calendar: The calendar allows readers to browse through older posts by day, month or year.

Categories: By assigning a topic category to each post, readers can browse through posts by topic, rather than date.

Personal Information: Most bloggers have a link to their email address so that readers can contact them directly or privately. Many also publish a short profile or biography.

Why are Blogs Important?

Blogs are influential publications because of their sense of immediacy, their reader-author connectedness and their fast-growing readership.

Blogs are innately democratic, giving everyone a voice and an audience due to the ease of publishing ideas and opinions.

Blogs have removed the gatekeepers of traditional media. They challenge traditional journalism because of their speed, penetration and the powerful credibility built by blogs’ social network.

Blog readers have created influential voices through the populist and self-regulating nature of blogs. These influencers augment and challenge the power of traditional main stream media (MMS).

They are interlinked, turning the web into millions of global conversations.

Blogs spread information and ideas at unprecedented speed, literally in real-time.

Blogs have the capacity to humanize companies and create a sense of connection and approachability with customers, shareholders, employees, and media.

Blogs are a method of monitoring word of mouth references to your organization, products or services.