Saturday, March 03, 2007

Revenue in a Wine 2.0 world

I discovered an interesting blog posting from last year, including comments from some of the most noteworthy wine bloggers - How Blog Tasting Notes Should Be. While there was some discussion about conflict-of-interest for wine bloggers recommending a wine and then making money off someone clicking on an affiliate link, I think that was off the mark. The nice thing about blogging and social networking is that the collective intelligence of the community is substantial. The good people will definitely rise to the top and the frauds will be exposed.

It seems to me that the heart of the matter in this post is how an expert wine reviewer can share their recommendations and be compensated for their skills and for sharing their wisdom. Currently, there are a relatively small number of professional wine reviewers, notably Wine Spectator, Robert Parker, Wine Enthusiast and Stephen Tanzer. They seem to rely primarily on the old-school, editorial forms of revenue (i.e. selling magazines and subscriptions). But, as social media becomes more important in people's lives, it is becoming possible to interact with wine experts who are less traditional. This is especially good if you are a wine lover, but don't feel like your taste in wine is similar to any of the major reviewer's styles. Andrew Barrow re-iterated this sentiment in his recent post about niche blogging.

Blogging is definitely one way that these new-wave reviewers can share their recommendations. (If you're interested in wine blogging, see the Wineblogs Roll in the right panel of this blog for a few good examples) However, while blogs are good places to share editorial recommendations, and some of the blogs out there are very entertaining reads, blogs are really just a higher-tech form of editorial. They need to be able to provide enhanced functionality for their readers, and they need to make sure their editorial still has value once a review falls "below the fold".

Although they didn't weigh in on this post, emerging cellaring sites, notably Cork'd and CellarTracker, are another way that people have been sharing their thoughts with each other. But, these destinations sites are going to be limited if they keep trying to drive traffic to their site to make money via advertising. There needs to be a way to extend the functionality into other communities and a way for the good users to be heard outside these respective systems.

Back to Josh's original blog post, where can people make money in all of this? The wine business is clearly a fragmented market that is begging to have technology step in and help consumers discover new wines. But, paying for click-throughs is not going to make anyone much money. It's great that sites like WineZap and wine-searcher offer affiliate programs for people, but the problem is that these pay-per-click programs will never be able to support a real technology business. And, there's too many middle men. There needs to be some consolidation in the industry, or at least some major co-operation. Lastly, the online communities need to be able to tap into the retail commerce side of things where the revenue is a bit more interesting.

The problem there is - the retail side of the wine business is about as fragmented as the production side. And, that's beyond the scope of this post.

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