From Social Media to the 3-D Internet: Companies Need to Change Up, Says Former RealNetworks Exec Kelly Jo MacArthur

Every once in a while, I sit down with a businessperson who brings a unique perspective to a huge global trend—and helps me see things in a profound new light. In this case, that person is Kelly Jo MacArthur, and the global trend is the explosion of social media and its broader impact on corporations.

MacArthur was the former general counsel, senior vice president, and chief of staff at Seattle-based RealNetworks—and she also did a stint at Linden Lab, creators of the virtual world Second Life—so she has her digital media and Internet technologies down cold. A 10-year veteran of Real, she left the company in 2007 and has been focusing on consulting work with startups, big companies, and other organizations across the fields of social media, networking technologies, cleantech and sustainability, traditional media, and arts.

We were talking recently about the future of companies like Twitter and Facebook, and what struck me was the way MacArthur thinks of social media as an inevitable—and inherently predictable—evolution of communication technologies on the Internet. That means smart entrepreneurs and executives should be able to anticipate how all of this is affecting societal behavior, and what the new opportunities will be. What’s more, she’s finding that these technologies are forcing big companies and organizations to completely rethink their core strategy and value proposition—indeed, their very existence.

Here’s an edited transcript of our conversation:

Xconomy: So what are you hearing from companies out in the field?

Kelly Jo MacArthur: In my own work as a strategic advisor to CEOs, various boards, and executives on their corporate strategy, the inevitable conversation is, “What should we be doing with social media?” I’m not a marketing person—they work with their advertising and marketing agencies—but it leads you to the conversation that each business, especially in more traditional, entrenched industries, should be thinking about how they’re relevant in the future. And how we as citizens and consumers are demanding more, and also participating more, in the offerings and opportunities that these businesses have.

There’s a huge opportunity, no matter what business you’re in, if you’re constantly thinking ahead about how we as societies are shifting. Versus focusing on, “Should I be using this tool, or should I have a Facebook page?” You should be using these tools for your customer service, but as important is understanding how the tides are really shifting. That’s been one of the most fascinating things about working with all kinds of businesses, from tech to non-tech.

X: How are the tides shifting? Is it about more than just how to reach customers?

KJM: Often businesses are used to thinking about connecting to their consumers through traditional media outlets—advertising, traditional websites. I work with industries ranging from the performing arts to traditional media, groups trying to effect major change in culture or in policy— environmental, social, or political. They often begin by trying to understand, how do we communicate with our constituents? How is the media shifting? If you take someone all the way through the process, I find we need to think, “These are tools available to us,” but it leads you back to a strategic review of your business and why you’re really there. Why you’re relevant, how you stay relevant in the future, and how you use these tools to connect differently or more in-depth.

But most importantly and without exception, we’re finding that consumers want to reach each other and affect the output. We have great power as consumers. That’s providing businesses with all kinds of opportunities. It’s a time for businesses to be very hopeful. They often think they don’t understand technology, but really we’re in a place and time where we need to understand communication, human behavior, media, all the underlying forces that drive us forward as a society.

X: Given your experience at Real, you have some valuable perspective on the rise of the Internet and social media. Where did all of this come from?

KJM: Netscape launched the browser in 1992-1994, which really opened the Internet to commercial applications. Thinking about RealNetworks, [founder] Rob Glaser was still at Microsoft, and he said, “It’s because of this commercial browser that I see the possibility of turning this network into a new mass medium.” That was the genesis of RealNetworks. Not necessarily to sell streaming media technology, but to create an alternative to the then-current mainstream media. He saw it as an ability to reach citizens around the world in a very social way, much as we’re beginning to see realized today. He introduced RealAudio in 1994. Some of the most interesting early applications were enabling people to create channels for communication of non-mainstream ideas, or ideas that were difficult to publish through the mainstream, all over the world.

One of the things that was particularly exciting was we got servers into Yugoslavia at the outset of the Bosnia war and allowed people to communicate outside the country, and inside the country when media was closed down by the government. We began to see the impact of putting media technology in the hands of anyone. That was very much related to the beginning of social media.

When media was introduced to the Internet, of course, the first people who began to think about how their paradigm would shift were people who control content and other traditional media channels. News channels, ABC News, NPR, News Corp., broadcast radio, then the music industry. The paradigms of how content is created, owned, distributed, and licensed around the world, paradigms which had been created for a non-Internet world—to this day, their translation has been very difficult. When you’re in an industry entrenched in its models, you must be able to think far out into the future, so you have the ability to control how your model will evolve, versus letting the provider of the technology, whoever it may be—Apple—decide how your industry is going to evolve because they become the way in which you reach consumers.

Some of the very first things broadcast on the Internet were college sports. Alumni were scattered around the country, and there was a belief that alumni would want to be able to listen to the basketball game from their school. That is an entirely social application, it’s about reconnecting with the community. But it’s a one-way device. As we moved into video, and broadband capabilities caught up with the media technologies, you saw things like YouTube evolve. YouTube really solidified the way we as citizens around the world feel we have the ability to communicate our own message to the people we really want to communicate with. In part because [Google] bought YouTube when they did, they do have the leverage to negotiate some outcome with the providers of content that have solidified that means of communication.

You overlay on top of that tools like MySpace and Facebook, which began, like e-mail—we needed ways to communicate with our small network of people. Because we understood how to open APIs [application programming interfaces] very broadly and advertising models were becoming more mature, it all converged very quickly in a way that has taken advantage of our desire as citizens and consumers to reengage in a more personal way with each other. It’s a very positive phenomenon—people want to create progress. And we don’t want to wait for companies to do it in their models. Companies have to think more quickly. They have to be more transparent, but they have an amazing opportunity to engage their users in helping them to be transformative right now.

Now, in my work with all kinds of different industries, it’s really accelerating the way and pace that they move into the future.

X: So what is the long-term future of social media? Some people are still wondering whether Twitter or Facebook are passing fads.

KJM: People say they didn’t predict the rise of Twitter or Facebook—and we don’t know what particular applications of the technologies will evolve—but in fact they’re not huge leaps, even from e-mail and other networks. It’s just we’ve been able to overlay all these other advances with broadband connectivity and especially mobile connectivity. It was inevitable.

I’m a big believer in the three-dimensional Internet. I think we’re going to continue to see the Internet become even more humanized, and I mean that in a way that allows us to engage our humanity more deeply versus taking it away. People worry about things like artificial intelligence, people often fear that without understanding what it means. I think we’re going to find the technology available to us, and the rapid implementation and the fact that we can create our own networks—it’s going to continue to explode at this pace, and we’re going to be able to do things because of the three-dimensional capabilities that are getting overlaid onto the network, that will have a huge impact on our ability to collectively solve problems.

X: What do you mean by “three–dimensional” Internet? Can you give an example?

KJM: A lot of companies like IBM and Cisco are working on these kinds of applications all the time, building within the network the ability to handle more three-dimensional capabilities where it’s a much more immersive experience. You can imagine situations like meetings in a three-dimensional capacity where you’re not just communicating through a video conference where you’re sharing a document, but you actually have a sense of physical presence in an environment, where you can all collectively look at a document on a screen—not on the computer screen, but on a whiteboard in your room. Its impact on education has great potential. We’re seeing successful adoption in education, medical research, surgery, and remote operations.

What we’re seeing in social networks is a very natural evolution, and all industries need to think about where we are in society, versus what new tool we’ll see next. I think Facebook and Twitter will both be very successful. I think we’ll see continued evolution of currencies and other mediums of exchange to facilitate transactions [like micropayments and virtual currencies]. We can create real value in virtual currencies. Not as “pretend” things—just like a digital product can have real value in someone’s life. And as all of this continues to converge because of mobility, I think we’ll continue to make it all easier.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and Editor of Xconomy Boston. E-mail him at gthuang [at] Follow @gthuang

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