Web 2.0 And The Business Model
Researching and writing about Web 2.0 seemed like a fairly easy assignment when it was first given to us in class. Only after I started my research into the phenomenon referred to as Web 2.0 did I realize it would be a slightly more difficult task than I though. The over abundance of articles online that simultaneously agree with and contradict each other made my head spin. Too many people seem to be throwing around the term and trying to bundle themselves and their work into the umbrella of “Web 2.0”, whether they belong there or not, because it is just the “cool place to be”.
Since I am in web design for the sole purpose of starting a second business I decided that researching what Web 2.0 meant to the business model would be the most valuable use of my time. I came across a pretty good article written by Ken Yarmosh at Technosight.com (http://www.technosight.com/web-20-business-models) in which he does his best to shed some light on this area. Since the term is more of an idea and lacks an absolute definition it is difficult to say with absolute conviction what it means to the business model other than a trend towards a more semantic web featuring asynchronous data transfer. The most informative part of this article to me was his breakdown of the two main types of Web 2.0 business models and what they represent to the new internet.
To me, Web 2.0 represents the idea that people as a whole are no longer satisfied with being force fed data compiled by someone with most likely completely different views and interest, instead we prefer to teach ourselves, decide what it is we are interested in personally, chose from who and where we receive our knowledge as well as allow other users to hear our views and possibly learn from us in return. Being able to do this conveniently with tool such as Mashups, feeds (RSS, Atom, etc.), social networking, tagging and blogging are what allows the average Joe or Jane to feel pride in making a personal mark on the web.
Any business that hopes to do well in a Web 2.0 era has to keep a few simple concepts in mind; unless you have developed some new technology so innovative and exciting that it sells itself, you will not succeed in this emerging new interactivity oriented, folksonomic (I may have just invented that word) market without an outlet for end users to be able to network, provide their own content, show their personalities and try to make their voices heard. You must be able to do all of these things with a twist that is both interesting and original while being so convenient for your end users to come to and use your product that they would have no reason to go anywhere else. After all, according to Metcalfe’s law, the bottom line in Web 2.0 business is - the total value of the service is roughly proportional to the square of the number of customers’ utilizing the service.
jlphannah said,
April 6, 2008 at 11:39 pm
I can’t say I share your opinion on the assignment being easy, but I do agree I didn’t think it would leave me this perplexed. After all the researching on Web 2.0 I still have questions, mainly to do with what is it? It looks like you have done a excellent job finding answers to your own questions about Web 2.0 and how it pertains to the business model.
Another note about Web 2.0, as it relates to the business model, is that to have any successful business it is wise to fully understand your audience. I think that is why “social networking, blogging, has become so important. A company that allows open discussion of their business (within reason of course) has better insight into their marketable public. What are your thoughts on that idea?
nicosilva said,
April 7, 2008 at 4:02 pm
I will admit, I have no mind for business. If money is somehow converted to some other abstract figure, I kind of get it, but otherwise the idea of business leaves a bad taste in my mouth. I’m more of the romantic, idealist, (hippy, I’m told,) I’ll-leave-my-mark kind of person. Despite that, you brought up a topic that is interesting even to me. Seeing these ideas condensed into such an article really puts a perspective on web-as-a-business sort of thinking.
The internet is becoming a great place to make money and I wish you luck on forming your own online business.
This is completely out there, but I think Myspace is a terribly organized site, and the applications they allow people to use only give me a headache. The designers for it should be shot, or at least made to use their own product. Maybe improve on their business model, but don’t make it so messy?
fanatiq said,
April 8, 2008 at 5:45 pm
I think you took an interesting take on this assignment. The new business models for web 2.0 interest me as well, and I liked the article you posted here. I especially liked the portion that looked at the two basic types of business models in Web 2.0. Do you have an idea of the type of business you would set up online? The question to me is, how does the business make money? One of the other students in this class cited an interesting article http://www.bit-tech.net/columns/2006/06/03/web_2_privacy/1. It got me thinking about revenue streams in the era of Web 2.0. YouTube, Flickr, MySpace– they all basically offer free services for people. I always thought they made their money on advertising, but they must be getting a lot more from the data they have. Very thought provoking post!
jdbosley said,
April 8, 2008 at 6:59 pm
I also read that article and posted a response to the student who listed it. I have yet to see any major advertising as a result of the information “they” are supposedly stockpiling on us. If these sites were being used to market to us why are they sitting on the information? There is not much more they could compile on us. Also there are laws about privacy which are enforceable by law, I doubt these companies want to get themselves into class action lawsuits. Advertising using contextual ads can be pretty good income in volume, people make money on click-throughs all the time. When I was an IT manager for a doctors office we paid a company called shareasale.com, this was a pay-per-click service, $5 per customer routed to our site. Imagine having those types of pay-per-clicks on a social networking site like myspace with over 100 million users, even if it was only 50 cents per click. Not to mention advertisements for movies and other things that don’t need a click through, just to be seen by as many people as possible. I believe myspace only has around 300 employees. Trust me, they are banking.
mwcain81 said,
April 9, 2008 at 9:29 pm
I think that the last line of your blog actually summed up the idea of web 2.0 nicely. If we realize that instead of creating a resource for the user we are creating ways for all the users out there to share their resource we can take advantage of Metcalfe’s law.
usernumber said,
April 9, 2008 at 11:04 pm
Nice postage about the 2.0age