« Power+Up attempts to identify cultural practices | Main | Ryan goes for the Next Level!!! »

November 21, 2004

Open Source Branding and the Reputation Economy


Open Source Branding and the Reputation Economy

by Glen Carlson

The shift in power from retailer/manufacturer to consumer is starting to happen. More importantly, consumers are beginning to recognize their power. Much of this recognition stems from open sources—the web, publications, social networks & communities—free markets to critique the “free market.”

Companies are starting to feel the effect of this phenomenon, especially in their bottom line. When two or more products are comparable in quality, branding and/or seductiveness that make the customer buy the product, and allow the producer to charge more, right?

That’s the way it used to be—a sharp logo, or a slick ad campaign used to relate directly to profits. This is why branding became a holy grail of sorts for companies. However, with this transition in business/consumer patterns must come a transition in branding.

The branding techniques employed in most cases involve setting a standard for a company’s visual presence—logo, business card, stationery, typeface, etc. This has some inherent problems:
1. If these elements are not visible, they are worthless
Deployment of branding is essential, but how branding is deployed is infinitely more important. Timing, location, material, interactivity—all of these site-specific elements determine the context of what is branded. If you have the most aesthetically pleasing logo in the world, if it is associated in a negative context, people will form a lasting negative opinion it. For example, Jack in the Box is still recovering from the association with a negative opinion. It took about 10 years, a ferocious new ad campaign, and a total restructuring of the way the company does business for them to even survive.

2. It does not allow for rapid change or adaptation
Branding and re-branding initiatives take a long time. Many times the visual standards for every single part of the company have to be scrutinized and either developed or redeveloped. Then there is bureaucracy: Board of Directors, CEO, CFO, CIO, Vice-Presidents, Managers, etc. In many cases all of these people must be satisfied with the branding initiative for it to proceed. Then, when something goes awry in the company’s branding, as it always will, the entire branding process must begin again.

3. It leads to aesthetic elitism
The idea of ownership in branding naturally creates havoc because branding involves emotions and abstract concepts. Does Coca-Cola own the concepts of joy and refreshment? Does McDonald’s own the emotion of happiness? I’d venture to say they think they do. The artistic/creative process is also an intrinsic part of branding, much like music and fine art. And like music and fine art, this leads to similarity and borrowing/inspiration/homage/sampling. Thus, companies end up suing themselves for copyright and trademark infringements. The end result of companies strictly controlling their branding is that the consumer gets left out, and the gap between company and consumer widens.

How can branding transition?

The concept of Open Source Branding hinges on three main ideas:
1. Adaptability and Modularity
2. Customization
3. Reputation
Consumers ultimately want control of brands, and with the shift in business power from manufacturer/retailer to the consumer, this can be successfully demanded. The more of its brand a company gives to the consumer, the more interest there is in the brand—provided the brand has a good reputation in relation to the consumer; a company can give its brand away completely—it won’t matter if no one wants the brand. Thus, we can see that reputation plays an important role in branding, and is a better term for branding in general. In the Open Source model, branding is the aesthetic and physical interaction between company and consumer, while reputation is the consumer’s opinion of this interaction and the company in general.

How does a company give away its brand? One way, which companies are already figuring out, is to offer products that are completely customizable. Two products that immediately come to mind are Apple’s iPOD, and Toyota’s Scion line of cars. The Scion website even declares right on the front page, “We relinquish all power to you.” These products have single-handedly created their own industries of accessories, which Toyota was smart enough to pre-empt. More importantly, these products have done wonders for their respective companies in terms of reputation. Why?

Both these products were actively branded up to a point; then the branding process was handed over to the consumer to complete in any way he or she deemed. When you see a person with an iPOD, odds are that it is completely covered in articles of personalization—outwardly you are viewing a mostly non-Apple product, but you see that it’s an iPOD. The concept of customization is more powerful that how the product it customized. Thus, Scion and the iPOD, will always be associated in a positive context, even if .the individual customization itself is negative.

Another way to give consumers control of a brand is to give a product away wholesale, with the intent that it will be modified and adapted. This is readily visible in the technology industry. Linux has done a wonderful job in this regard. Whole countries have adopted Linux as their technology of choice—it is adaptable, it is customizable, and it enhances the company’s reputation. Linux has made such an impact that Sun will be releasing the Solaris OS as an open source.

The challenge of Open Source Branding comes in maintaining a modular, adaptable aesthetic without it leading to aesthetic elitism. Something will have to be developed, like the Creative Commons copyright that will allow a range of protections and freedoms for branding elements—perhaps a Creative Commons Trademark? This way, aesthetic elements become usable, modular tools to inform the consumer and modify reputation, rather than restricted marks that can only be used in constrained ways by certain people.

What does the Reputation Economy have to do with Open Source Branding?

Reputation is becoming more important that Branding, and one could make the argument that it always has been—what is important is that now the difference between the two is apparent and making a difference in the business world (read Wally Olins’ On Brand for more on this and reputation management). The power shift from manufacturer/retailer to consumer is taking place as I write; what happens when consumers fully realize their power? Where will we go from here?

One very conceivable route is the emergence of the Reputation Economy. This is not a concept developed by myself, but I believe it is a very real possibility, especially in conjunction with Open Source Branding. Open Source Branding can lead to a Reputation Economy because it resonates with consumers making decisions based on a company’s reputation. When consumers realize their full power, companies with nice looks will not have the advantage they used to; it will be multiple levels of reputation—renown, service, ethics, etc.—that make the difference to the customer. Open Source Branding takes this into account, and actively influences the reputation status of a company in relation to the consumer.

In the Reputation Economy, consumer groups and social networks that assign reputation points, or “whuffie” as Cory Doctorow proposed in his novel, Down and Out in the Magic Kingdom, will monitor companies much like a seller’s rating on eBay. For example, Company A has a +83 rating in renown, a -5 rating in service, and a +30 rating in ethics out of a ±100 scale, while Company B has a +22 rating in renown, +50 in service, and -46 in ethics. The customer then makes a choice based on individual opinion of what is important to him or her. Open Source Branding gives companies an adaptable way to represent themselves in the Reputation Economy.

Posted by SWEAT at November 21, 2004 09:16 PM


Common between Tribal Affiliation and Voluntary Subculture (or even Hegemonic, for that matter) Membership is the characteristic of an individual wanting to join a larger group. Usually, this involves changing one's personality, at least momentarily, in order to gain acceptance - initiation/hazing takes many forms (in terms of branding, think iPod = totem).

The Open Source Branding model reverses this phenomenon, at least somewhat. In Open source Branding, corporations want to belong to consumers. So, in a way, there is no differentiation between Tribal Affiliation/Voluntary Membership and Open Source Branding, except for role reversal. This is a major change, though, considering current business practices.

Posted by: -glen! at February 14, 2005 12:56 AM

How can we differentiate Open Source Branding from Tribal Affiliation or Voluntary Subculture Membership?

Posted by: Rafael at February 4, 2005 09:44 AM