All “New” Web2.0 Business Models are Advertising Supported

On the way to the airport, I was thinking about the Mindshift Web2.0 Panel that I just sat in on, asking myself why it is that the most highly regarded web2.0 companies don’t make any money. The holy grail exit strategy seems to be: get acquired by yahoo or google … but that can’t be the only business model, because you also have the facebook and myspace models, and more recently, sources tell me that digg.com is cash flow positive. But these are all ad-supported and in terms of getting “rich,” which is supposedly the unstated goal of most entrepreneurs, it’s yahoo and google that make dollar signs appear in the eyes of most bootstrapped web2.0 ventures.

Of course, I first questioned my underlying premise – is it true they don’t make money? I did some napkin math on flickr just prior to the yahoo acquisition, and based on assessing a random sample for pro accounts, it appeared to me that flickr was not making enough money to be profitable. I know, I know, the value to yahoo was not in cash flow, it was the value of the network, but let’s think about that for a second. The value of the network was small for flickr, it was large for yahoo, which is what commanded the acquisition multiple. So how does yahoo monetize a network. That’s right … through advertising.

So is it true that all web2.0 business models are advertising supported. That depends which internet camp you are in. Is the internet all about software? Or is the internet all about media distribution? I am in the latter camp … and media distribution has been advertising supported for at least the last century. When you also consider that web2.0 attributes, such as social networks and community aggregation, only make advertising more lucrative by commanding more contextual application and a correspondingly higher CPM, then it makes sense that the web2.0 business model is advertising-based.

But what if the internet is about software development? In the absence of shrink wrapping, I think that software is no longer a product that you can sell for money. It is merely an enabler of user experience that helps people get things done. Increasingly, getting things done is about media consumption and community building. Basecamp aside, people are unwilling to pay for most consumer-facing applications. I wonder if that will ever change.

If you rewind the clock all the way back, ebay and amazon.com are web2.0 companies – they create networks to engender trust between buyers and sellers, they use reputation managers and recommendation engines, and they highlight simplicity in their business models (if not in their user interface). And yet, they don’t make money through advertising. Instead, they make money by taking a little off the top of transactions. Ebay aggregates buyers for sellers and amazon aggregates sellers for buyers, but their revenue is transaction-based. But again, the “user-customer” doesn’t pay for this, the “seller-customer does.”

I know that people scoff at advertising, but isn’t that where the business models need to be centered? Or do the business models even matter as long as yahoo and google are collecting the advertising dollars for us?

Another Blog Business Model: Flea Markets

Making meaningful money from blogging remains an elusive quest for most bloggers, even ones who have what might be terms "a lot" of traffic. Sure, there's ads, but that'll only take you so far.

Anyway, here's something cool: The blog Brownstoner, a popular Brooklyn-based blog about real estate, renovating and other things that appeal to Park Slope yuppies has launched its own flea market called Brooklyn Flea. It happens every Sunday in a parking lot in Ft. Greene. The vendors it appeals to sell antiques, vintage stuff, and other things that appeal to the site's readership. And according to a friend of mine, who has a business selling vintage clothing, the opening weekends have been hot hot hot.

Not that I fall into the targeted demo at all, but I'll have to check it out and report back.

Australian couple loses home via Facebook

CANBERRA, Australia (AP) — You've been "superpoked" — and served. An attorney in Australia has used the popular networking Web site Facebook to notify a couple that they lost their home after defaulting on a loan.

The Australian Capital Territory Supreme Court last Friday approved lawyer Mark McCormack's application to use Facebook to serve the legally binding documents after several failed attempts to contact the couple at the house and by e-mail.

Australian courts have given permission in the past for people to be served via e-mail and text messages when it was not possible to serve them in person.

The lender's application to take back the house in the capital, Canberra, was approved on Oct. 3 after the couple failed to appear in court. The lender was then required to serve the so-called default judgment on the couple before it could seize the property.

"It's somewhat novel, however we do see it as a valid method of bringing the matter to the attention of the defendant," said McCormack, who represents a mortgage lender.

Facebook has become a wildly popular online hangout, attracting more than 140 million users worldwide since it launched in 2004. Facebook friends can "poke" or "superpoke" each other — terms for giving someone a playful nudge.

Lawyer and computer forensic expert Seamus Byrne said he was aware of only one similar case in Australia. A Queensland state District Court judge ruled in April against documents being served by Facebook because the option of contacting a person via a post office box had not yet been exhausted.

In the latest ruling, Master David Harper insisted that the documents be attached to a private e-mail sent via Facebook that could not be seen by others visiting the pages.

McCormack said he and a colleague found the woman's Facebook page using personal details that she had given the lender including her birth date and e-mail address. The man was listed on her page as a friend. Neither had imposed security options that deny strangers access to their pages.

McCormack said he did not bother searching for the couple through any other social networking sites.

"It's one of those occasions where you feel most at home with what you know and I myself have a Facebook account," McCormack said.

How to monetize your Web 2.0 application?

A lot of people will be wondering the same thing the first time they hear about building businesses around Web 2.0, “After creating a Web App.. what happens next? How do we generate money out of it?”

Its nothing complex, really. As long as you can build an interesting or useful app, there comes the quality traffic. Quality traffic always comes with quality users. And when there are quality users, guess what? There’s money… lots of `em too. Look at Friendster and Myspace. Their founders are now millionaires.. how do you think they pull money out of those apps?
You need to have some kind of business model before you build that app… or at least an idea of how to generate money out of it

We’re all in the business of making money here. Depending on what type of services your web application offer, there can be many different ways to monetize it. A lot of these have been practiced in the offline business world for ages, but the fact that we’re doing it “the web way” makes some new people in this industry a bit confused.
1. SUBSCRIPTION BASED MODEL

This is one of the widely used business model in the industry of Web 2.0, specifically for those web apps that provide “uniquely” useful services and don’t have so many scary competitors. Usually those that uses this approach will also provide FREE subscription plan but with limited functionalities. This strategy is implemented just so that the users will be able to try out their services before deciding later on whether they want to upgrade to a paid subscription if they need the extra functionalities. Some people upgrade because they want to remove ads and other types of annoyances in their account. According to Ryan Carson, in most cases 98% of the users will be on the FREE plan and only 1-2% will actually upgrade. However, if you have a REALLY huge user base, 1-2% may actually be worth it. Basecamp, Freshbooks, DropSend and Shoutmix (a Malaysian shoutbox provider) are some of the famous Web 2.0 startups that uses this approach.
2. ADVERTISING MODEL

Reserve some space on your web app for advertisers to put their advertisements on. This can be done in many creative ways depending on your application’s behavior and not necessarily just by putting banner ads on the webpage. Take for example Revver, an alternative online video sharing service like YouTube. They append short video advertisements at the end of each uploaded videos. Some widget-based web companies will put small ads on their widgets too. Feedburner allows putting ads in their user’s RSS feeds. This type of business model is mostly used by apps that has massive amount of target audience or users. Most of them usually provide absolutely FREE service/accounts to attract that number of traffic.
3. SELL STUFFS ONLINE..

Although selling stuffs sounds a bit traditional but it still is very practical and web2.0-ish if you do it the right way. Check out CafePress for instance… the company that actually allows you to design t-shirts online (and also caps, mugs, etc), and buy it without any minimum order. To make it better, they would even allow you to open up your own e-store with those designs you just created and get commissions out of it, shippings handled 100% by them. Isn’t that idea just plain brilliant? I think I should create an app like that someday… Tongue out
4. REVENUE SHARING MODEL

This is also a type of “advertising model” with the exception that instead of taking all the advertisement revenues for yourself, you also share a few percentage of it with your users who help spread the ads across the web. Such examples are Google AdSense, PayPerPost, Text-Link-Ads, Advertlets and ImageFly. By giving some percentage to your users, you’ll instantly create the buzz and attract lots of participants very quickly. This will exponentially increase your advertising network and thus giving you the extra credibility to attract bigger advertisers. This is a business model with a marketing influence injected to it. The disadvantage about this approach however is that keeping up with your publisher’s payouts could be very troublesome and time consuming. You need to constantly make your publishers happy cuz one mistake might get you into lots of trouble in terms of reputation.
5. REVENUE THROUGH PPC PROGRAMS

PPC stands for Pay-Per-Click. This is one of the easiet way to generate money out of your web app because you only need to place some non-intrusive ads around your application and get paid for every valid clicks made on those ads. It can actually be implemented in almost any web app of any types and combined with other main business models. Google AdSense, Yahoo Publisher Network (YPN) and Bidvertiser are some of the PPC programs out there widely used by many apps to generate revenues. Example apps that uses this monetization method are Friendster and Flickr. Possibly worth it for high traffic apps.
6. SELL YOUR WEB APP

A lot of web startups out there dreams of getting acquired or bought off by the giant web companies out there like Yahoo and Google. While this is not really a business model, it does give you the monster-bucks (we’re talking [b][m]illions here ppl Cool) very quickly. Basically it is selling off your business so that you can stop managing your web app and just enjoy the money. Few months ago YouTube and Feedburner was sold off to Google for about 1.65 billion and a hundred million bucks respectively. Now their founders are living in heaven. You need to be very good in statistics to attract these buyers tho, because you need to prove to them giants that your app is really worth that much.
OTHER MODELS.. THINK.. THINK..

I can’t possibly list all business models here. What I have stated up there are some of the major business models used by many Web 2.0 companies. Companies like Paypal and E-Gold for example have their own business model on the base of electronic-currencies which I haven’t yet stated in the 6 points above. Ebay, Amazon and Alibaba also have their own unique business models. The point is that by being a little bit creative, you can turn money out of almost any ideas you can think of. The most important part now is to start building upon that idea! Money mouth

http://web2.0entrepreneur.com/tag/ideas/

Web2.0Slides is a self-running slide show of over 1,400 of the best Web2.0 sites. It's categorized by tags and sorted alphabetically.

What's cool about it? You can click on any site in the left-hand column to pause the slide show and surf around. When you're done, simply click PLAY, and it will begin right where you left off. Perfect for Web 2.0 couch 'taters. But if you're antsy and want to click around on sites, go right ahead—it won't stop the

Web3.0 for dummies

A few weeks ago I saw a presentation by Dutch internet strategy adviser Freek Bijl. In his presentation he used a few simple but charming analogies to explain what Web3.0 is and what technologies it uses. The presentation was clear and easy to understand which is rare when it comes to technical stuff like this.

I complimented him on it and asked if he could make an English version available online so I could link to it but he replied that he didn’t have an English version. Today Freek emailed me that he took the effort of translating the whole presentation so we could post it here.

There are two parts to the presentation and I’m including the second, more indepth, version here. If you like the presentation do also check out Part 1.


Before I could post it here Slideshare discovered his presentation too and put it on their ‘featured‘ pages so it is becoming quite popular now.

What is web3.0

Web 3.0 is one of the terms used to describe the evolutionary stage of the Web that follows Web 2.0. Given that technical and social possibilities identified in this latter term are yet to be fully realised the nature of defining Web 3.0 is highly speculative. In general it refers to aspects of the internet which, though potentially possible, are not technically or practically feasible at this time.

What is SNS?

A social network service focuses on building online communities of people who share interests and/or activities, or who are interested in exploring the interests and activities of others. Most social network services are web based and provide a variety of ways for users to interact, such as e-mail and instant messaging services.

Social networking has created new ways to communicate and share information. Social networking websites are being used regularly by millions of people, and it now seems that social networking will be an enduring part of everyday life. The main types of social networking services are those which contain directories of some categories (such as former classmates), means to connect with friends (usually with self-description pages), and recommender systems linked to trust. Popular methods now combine many of these, with MySpace and Facebook being the most widely used in North America;[1] Nexopia (mostly in Canada);[2] Bebo,[3] Facebook, Hi5, MySpace, Tagged, Xing;[4] and Skyrock in parts of Europe;[5] Orkut and Hi5 in South America and Central America;[6] and Friendster, Orkut, Xiaonei and Cyworld in Asia and the Pacific Islands.

There have been some attempts to standardize these services to avoid the need to duplicate entries of friends and interests (see the FOAF standard and the Open Source Initiative), but this has led to some concerns about privacy.

The MySpace Business Model

MySpace is free, but a thriving business nonetheless, acquired by News Corp last July. Trent Lapinski muses on the MySpace business model:

… there is no money in giving millions of people costly web hosting space for free, but there is in owning demographic info ranging from just someone’s e-mail address to personal information for targeting advertising at them.


I guess privacy advocates and downright paranoid individuals have a reason to shun away from MySpace.

… the MySpace privacy policy and company filings including all users’ information lists, databases, text, files and documents are explicitly documented as an asset of MySpace. The agreement also states MySpace can sell the site and all user information to a third party that might not necessarily follow the same privacy policy as MySpace. To put it simply, MySpace owns everything a user provides them with.

MySpace’s Business Model Conundrum

I’ve been predictingfor a while that companies would find ways to leverage the community marketing power of social networking sites like MySpace without the network seeing any financial benefit. Here’s a perfect example (via The Economist):

MySpace seems to offer a chance for companies to take their marketing into new, potentially more lucrative territory, by becoming, in effect, members of their customers’ network of “friends”. A growing number of firms have established their own pages on MySpace, to which users can link. In the process, some are getting into bed with some unlikely partners. Earlier this year, for example, Unilever, a consumer-goods giant, hooked up with Christine Dolce to promote Axe, a deodorant. Ms Dolce, who goes by the alias ForBiddeN, boasts around 900,000 “friends” who link to her MySpace page. Bleached, buxom and with impressive marketing savvy, she is arguably the most successful brand to emerge from MySpace, and has already launched a line of clothing.

That made her perfect, Unilever concluded, to draw in the 18- to 24-year-old lustful lads to whom Axe is shamelessly marketed. So Ms Dolce hosted an interactive game, called “Gamekillers”, based around dating tips and designed subtly to promote Axe. Some 75,000 MySpacers signed up for it.

It’s not clear whether MySpace is getting any revenue from ForBiddeN’s Axe deal or any of the ads she runs for her own products. My guess is if they are, it’s not a significant percentage of the total dollars in play (please let me know if you’ve heard otherwise).

The risk to MySpace and other social networks is that savvy users like ForBiddeN will monetize the attention of other MySpace users and cut MySpace out of the loop.

MySpace is serving ads on ForBiddenN’s page:

But I’ll bet Christine Dolce’s own ads are getting a lot more attention:

So what if MySpace tries to strong arm their way into the loop?

The users will just go elsewhere. Ask Friendster. (Or MySpace users who found their accounts missing.)

There is also an opportunity for ad networks to cut out the social network middleman — uEndorse, for example, is creating an ad channel that allows social network users to chose ads that appear on their pages and to endorse those commercial messages.

As I’ve said before, I think the big opportunity is in giving users a piece of the action.

Users will increasingly want to monetize rather than BE monetized.

Donna Bogatin (one of my favorite skeptic bloggers) does some back of the envelop math to estimate that MySpace is currently able to squeeze about $2 out of each user on average:

Using very rounded numbers, here is a “quick and dirty” analysis:

* MySpace 2005 acquisition price: $580 million
* MySpace 2006 “friends” user base: 100 million
* MySpace 2006 ad revenues: $200 million

MySpace acquisition price reflects an approximate multiple of $5-$6 per “riend.”

MySpace is currently generating approximately $2 in revenue per “friend.”

This assumes, of course, that MySpace is able to act as the intermediary for each user’s attention…but when you live by the “users in control” sword…

UPDATE

According to the WSJ:

Popular members like Ms. Dolce represent something of a dilemma for MySpace. The site says it has no problem with the photographs and content on Ms. Dolce’s page, which, while racy, stop short of being pornographic. Recently, however, MySpace, which is owned by News Corp., has been working to promote a family-friendly image to appeal to potential advertisers — some of whom could be leery of sexually suggestive pages like Ms. Dolce’s.

Ms. Dolce’s commercial deals have occasionally run afoul of MySpace’s rules. The service doesn’t allow using the network for direct commercial gain; because of the site’s regulations, Ms. Dolce is prohibited from sending mass messages to her MySpace friends about the products she’s paid to endorse.

And yet Dolce is running ads for her own products on her MySpace page.

Why is it that information on the economics of MySpace is always so sketchy and fuzzy?

web2.0 Technology overview

The sometimes complex and continually evolving technology infrastructure of Web 2.0 includes server-software, content-syndication, messaging-protocols, standards-oriented browsers with plugins and extensions, and various client-applications. The differing, yet complementary approaches of such elements provide Web 2.0 sites with information-storage, creation, and dissemination challenges and capabilities that go beyond what the public formerly expected in the environment of the so-called "Web 1.0".

Web 2.0 websites typically include some of the following features/techniques that Andrew McAfee used the acronym SLATES to refer to them: [14]

1. “Search: the ease of finding information through keyword search which makes the platform valuable.
2. Links: guides to important pieces of information. The best pages are the most frequently linked to.
3. Authoring: the ability to create constantly updating content over a platform that is shifted from being the creation of a few to being the constantly updated, interlinked work. In wikis, the content is iterative in the sense that the people undo and redo each other's work. In blogs, content is cumulative in that posts and comments of individuals are accumulated over time.
4. Tags: categorization of content by creating tags that are simple, one-word descriptions to facilitate searching and avoid rigid, pre-made categories.
5. Extensions: automation some of the work and pattern matching by using algorithms e.g. amazon.com recommendations.
6. Signals: the use of RSS (Really Simple Syndication) technology to notify users with any changes of the content by sending e-mails to them.”

What is Web 2.0

According to wikipiedia:
The term "Web 2.0" describes the changing trends in the use of World Wide Web technology and web design that aim to enhance creativity, communications, secure information sharing, collaboration and functionality of the web. Web 2.0 concepts have led to the development and evolution of web culture communities and hosted services, such as social-networking sites, video sharing sites, wikis, blogs, and folksonomies. The term became notable after the first O'Reilly Media Web 2.0 conference in 2004.[1][2] Although the term suggests a new version of the World Wide Web, it does not refer to an update to any technical specifications, but rather to changes in the ways software developers and end-users utilize the Web. According to Tim O'Reilly:
“ Web 2.0 is the business revolution in the computer industry caused by the move to the Internet as a platform, and an attempt to understand the rules for success on that new platform.[3] ”

Tim Berners-Lee, inventor of the World Wide Web, has questioned whether one can use the term in any meaningful way, since many of the technological components of Web 2.0 have existed since the early days of the Web.

Facebook’s Uncertain Business Model

Mark Zuckerberg believes Beacon - the company’s much-aligned advertising service - needs work but he’s confident it will be successful. What else is he going to say other than making a meek apology about Beacon’s inauspicious debut?

Zuckerberg needs to be optimistic about Beacon because Facebook is still, arguably, looking for a “killer app” to generate revenue. It needs a eureka, we’ve hit the gold mine moment much like Google experienced when it suddenly dawned on Larry and Sergey that Overture’s CPC model was the trick to taking making Google a business.

Sure, Facebook has nearly 60 million users but is anyone completed convinced yet that it can transform this critical mass into a business - and a business that can justify a $15-billion valuation? The answer is probably “yes” but Facebook is still struggling to find its way.

TechCrunch questions some of Beacon’s methodologies and privacy issues, while BoomTown and Larry Dignan hope Zuckerberg gets grilled a little when he appears on “60 Minutes” this weekend.

By the way, when did “60 Minutes” become the forum to plead your case when you find yourself on the hot seat? First, Roger Clemens; now Zuckerberg.

Web2.0 Business Model Characteristics

This late evening I sat down to do some brainstorming on the characteristics of
Web2.0 Business Models. The outcome can be found in a simple graphical mindmap form on Flickr - a Web2.0 business model ;-) I used the nine business model building blocks of my business model framework to classify the characterists.




I have to admit that I was a bit tired when I came up with the map and definitely too lazy to write down my thoughts - that might come later when I re-digest the mindmap...

Does SEO still work?

SEO ( Search Engine Optimization ) is step by step to optimise code structure or web pages, and doing whatever to becoming web pages appear in the first search engine result page. But the question is what SEO still work for our web pages after all people did it to optimise their web pages also?

For you know that all of us learn how to do SEO for our websites but we also know that all of there are not success. So may be some of us are confuse after did it all. Then I think it for ask myself, what SEO still work at this time after all people customise their website, how if some of us do not optimise our websites, will it die? by the way half people in other world say that contents are more powerful then you optimise your websites to SEO theory!

Why a Millionaire Businessman Took a Beginner’s Class in Entrepreneurship

This is a guest post from Tim Clark, who writes about money and meaning at Soul Shelter, which just turned one year old!

An entrepreneur I met years ago recently sold his company for a large sum — he wound up with some $14 million after taxes.

I learned this when we crossed paths a couple of months ago and renewed our acquaintance. After hearing about my approach to teaching, he asked me to deliver a personal, one-on-one, remote version of the Introduction to Entrepreneurship course I teach in two local graduate business programs.

Why would someone worth $14 million enroll in a beginner’s entrepreneurship course? Though my new student’s entrepreneurial achievements outshine my own, I was only mildly surprised when he asked me to teach him. Here are just three reasons he might have asked for my help:

1. Entrepreneurs value education in all forms. Most successful entrepreneurs have some college experience, and even the most street-smart, self-made, academic-deriding School of Hard Knocks types recognize that everyone can learn from formal study. My student is discovering, as I did, powerful principles that articulate what entrepreneurs sense in their guts — and that such articulation is highly useful. My pupil also confirms the commonsense observation that successful people study continuously, whether formally or on their own.
2. The industrious become wealthy, and the wealthy remain industrious. Industrious people tend to become wealthy, and they remain industrious after they become wealthy. You don’t find many pool-loungers among self-made millionaires. My student never has to work another day in his life, but he’s decided to achieve mastery in a new field: entrepreneurship. He’s already working on several new ventures, some of which may be non-profit.
3. Respect and humility. Successful people respect and learn from others’ accomplishments, big and small: they don’t hold themselves above or aloof. They’re usually modest about their own successes, too, and recognize that even the accomplished have much to learn.

Interview a dozen or so successful company founders, and you’ll recognize these same traits.

Now my student and I are in our seventh week of “classes.” He is, of course, an outstanding pupil, and like all teachers, I learn more from the student than he does from me.

Why would someone worth $14 million enroll in a beginner’s class in entrepreneurship? For exactly the same reasons he’s now worth $14 million. And because he recognizes that in the larger scheme of things, we’re all beginners still.

J.D.’s note: I am a huge advocate of continuing education. From my experience, it’s the people who strive to improve themselves who are best able to achieve their dreams. I make my living as a writer, but I continue to take writing courses because I know there’s more to learn.