Web 2.0 and the Missing Business Model

Dietrich Kappe, Tuesday, August 22, 2006 @ 9:00 am

Everyone has a Web 2.0 rant and I guess it's time for mine. Over at BloggingStocks, Tom Taulli in an article entitled eBay: The Web2.0 Killing Fields observes that ebay is seeing the liquidation of lots of Web 2.0 startups. He makes a valid point that Web 2.0, much like many of the dotcom startups, don't have a business reason for being:

But there's a problem: while these sites are definitely cool, the business model is often hazy. After all, when you give something away, you need either a premium product to upsell or a lot of users to monetize things with advertising.

How does this square with Tim O'Reilly's principles for Web 2.0? So far the only principles adopted by the Web 2.0 social bookmarking sites is "wisdom of crowds" (aka, let the users create the content for you) and "rich interaction" (aka, Ajax) to make their apps/site as usable and cool as possible, and counting on network effect to drive value for their users. Meanwhile all of the Web 2.0 "web is the platform" startups are either being acquired or driven out of business by Google. This far into the Web 2.0 hype cycle, from a business model perspective, the offerings out there are still very much of a yawn.

The social bookmarking sites, especially, are an inch deep when it comes to that user created content. Flickr and the user created Korean news site, Oh My News (english language site) are the exceptions here, with original content being contributed by its users.

We've all read the various models being bandied about, from micropayents, to advertising to selling offline copies of the agreggate. This may be the best one yet, through:

OK, so you buy a domain and web service hosting for one year ($200?). Then you quickly throw a webpage together that renders some XML as HTML. Put it on eBay and pocket $4,000? Repeat weekly and you are making $200,000 per year.

Fortunately for all of us Ajax developers, Web 2.0 isn't the only thing driving Ajax adoption.

Technorati : ajax, business model, web2.0

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Comments: 1 so far

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1. 

   I’ve posted about something like this on my forums a while ago, check it out: http://forums.programming-designs.com/viewtopic.php?id=486

   Comment by Daniel, Wednesday, August 23, 2006 @ 3:31 pm

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