Electronic communities as intermediaries: the issues and economics

Abstract

Virtual communities or electronic communities are social aggregations of a critical mass of people on the Internet who engage in public discussions, interactions, and information exchanges with sufficient human feeling on matters of common interest to form webs of personal relationships. Many such e-communities are rapidly evolving on the Internet, some formed organized, and controlled by community members themselves, some organized and controlled by marketers, and some by third parties who act as intermediaries between members and other interest groups such as marketers and advertisers. While some communities strongly disavow any interactions of a commercial nature, many communities view commercial interactions as being beneficial to the growth of the communities and to the community members. We explore the role of e-communities as intermediaries in exchange relationships among community members and between community members and other interest groups such as marketers and advertisers from an economic perspective. In particular, we focus on the types of interactions that take place among community members and between community members and other interest groups and examine the economic issues involved in maintaining a healthy community. Deriving parallels from extant research in intermediation, we explore conditions and incentive mechanisms under which such communities could thrive on the Internet. We also draw on limited empirical examples from the World Wide Web in support of our hypotheses.