There are basically two major directions in which social media impact businesses today:  (1) as part of a marketing strategy and (2) in the design of new business models.

An example of the creative use of social media as part of a business model is Zattoo, an internet service that brings TV to personal computers, and lately even to the iPhone.The Zurich-based start-up was one of the first peer-to-peer (P2P) internet television services. Ever since, it has struggled to successfully monetize its technology. Zattoo’s business model has placed the service as intermediary between broadcasters, advertisers and TV consumers. None of these are known to be overly thrilled to pay much…

With subscription services for high-quality streaming,advertising, and certainly lots of external funding, Zattoo has survived until today, but the real take-off has yet to happen. The recent re-launch of their service may actually just do that.

What is it that makes me think so? Well, Zattoo seems to have a strategy to leverage social media and the conversation between content providers and consumers. They may have found a way to finally enlarge their customer base, keep customers engaged and turn that into money.

Their new player has the built-in capability to follow current Twitter comments and discussions, all conveniently displayed next to the TV stream. These tweets are filtered based on which channel I watch. Why am I excited about this? Because it’s all about content creation and distribution.

In the age of social media valuable content is created decentralized, which is not easy to handle, let alone steer or utilize by companies. Zattoo’s users are enticed to tweet about what and which channel they watch on TV. They share their comments freely in order to participate in the ongoing Twitter conversation. Their pay-off is more credit and potentially followers. The pay-off for Zattoo? Well, as a broadcaster this is what I want – knowing who is watching my content, and what they are thinking. From Zattoo’s perspective, I’d for sure try to sell this.

In addition, Zattoo itself will know more about their customers, thus being able to place ads more targeted and for a higher price-tag.

Conversation is key in social media, and finding clever ways to build on it is a key ingredient. Will Zattoo make it? I don’t know. But I want to congratulate them for having designed an engaging business model that for sure shows the potential of our ways to communicate and exchange via social media today.