Web 2.0

June 8, 2006

Web 2.0 = Web 1.0 – significant (potential) revenue stream.

Now I apologise if this post makes you feel a slight bit dumber than you were before reading, but I couldn’t get to sleep and decided to write instead. Take what I am about to say with a grain of salt. I work for an uber-big consultancy where tried-and-tested are the norm; Innovation is far to expensive, not to mention risky, and we’re all about making profit from working with brick and mortar companies, you know, the ones that have returning custom from a large market. About as far removed from Web 2.0 as you can get.

The are only a few revenue streams I see being used by all the Web 2.0 companies popping up.

  1. Google Adsense, or something else very much like it, including sponsorship.
  2. Direct Partnerships with other online retailers (Those who survived Bubble 1.0, I guess).
  3. Subscriptions to a premium service.

I don’t see how any of these revenue streams can lead to long term profitability. I generally don’t click on ads, I may click through to a partner in order to buy a product; but i’m more than likely to visit the partners site directly than follow a referrer link (out of habit, not because i’m trying to shaft the referrer).

Sure, I love using all the new services, so long as they remain free I will do so. I’m unlikely to subscribe to premium services, and if basic service was to be charged for I would stop using the service all together. Sure it’s only $5/mo, but $5/mo multipled by 10 or more is a lot of cash.

I realise that by being a techy, I am not your “average user”. My mom is more likely to click on an advert. My mom is also (much) less likely to use any of the Web 2.0 sites as they seem to generally concentrate on the tech community, so that argument is generally out of the question, at least until tech becomes mainstream.

Am I missing something here?

Web 1.0, as far as I can remember, was mostly about selling stuff to people through online retail. There was a direct business plan, a way to make money. Selling stuff.

Web 2.0 is about community, Not sales. Where is the money going to come from once the VC funds are all spent.

At least this doesn’t look like it is heading towards Bubble 2.0. Yet. Companies don’t seem to be randomly IPO-ing on any kind of scale like back in the late 90s. I wonder whether this will start happening soon once the VCs realise their money has been spent and start wanting to see some return on their investment?