October 28, 2005

Bubblegeneration on web 2.0

Umair Haque has a couple of interesting posts on Web 2.0

Web 2.0 is too geeky :

web 2.0 services like minimalism (think Google's original clean layout) which reduce transaction costs but don't attract the mainstream. The answer is to partner with existing major players to get better known (and maybe educate a wider public about the virtues of your way of doing things.)

The shape of Web 2.0 is a natural monopoly :

Part of what he's getting at here, is that traditional media is based on having an exclusive right to a broadcast channel and therefore audience. Web 2.0 giants are still giants. And startups are aiming less to "disrupt" the market than to get bought by Yahoo, Google, etc. It's portal theory again. Each startup really wants to be incorporated into one of the mega portals.

Haque doesn't think this is a good idea :

I think these are kind of the wrong incentives for entrepreneurs. What made the Valley cool was it's refusal to think small, and do truly disruptive things. But getting a small change acquisition to essentially extend a Yahoo/Google/etc product line sets incentives for incremental, not disruptive, innovations and models.

Genuinely disruptive ideas are hard to sell to incumbants. And web 2.0 doesn't fix this problem. By designing to sell to the giants, you become conservative.

At the same time, compare Paul Graham's assertion that

Success for a startup approximately equals getting bought. ... you either have to get bought or go public, and the number of startups that go public is very small.

So individually, the incentive isn't there.

Maybe a different take on this is that all those "keep your data on our central servers" sites may play well with customers and complementary services, but are fairly viciously rivalrous with similar services. It's not really easy (or sensible) to divide your email consumption between Yahoo and GMail.

Thus centralized database web 2.0 companies are in pretty zero-sum competition with each other. In which case, something that could help Yahoo to destabilize Google might well be welcomed by the former.

Success vs. success :

People are too focussed on the original web 2.0 business models when they should be looking at yet further ones.

In particular, Umair seems to want to promote things that distribute the money for participation yet more evenly through the community. A good egalitarian sentiment I can agree with. But I'm not sure the reason is simply companies are too obsessed with existing business models. I think a lot of these people are (at least in their role as strategists) "greedy". They don't want to share the spoils more than they can get away with.

Google's AdSense was disruptive because it shared a lot more in return for a far larger base of customers and partners. I'm sure this could happen again, but there is a limit. Advertising works when where it's placed has enough spare attention that it can share a little bit with an advertiser. A popular web-page might just have that. But something smaller, eg. an hCalender record might not have spare attention to share with the advertiser.

Not saying I disagree with Haque exactly, but the lack of new advances in business models may be partly "people are not adventurous enough" and partly "it's pretty difficult to find them".
And I do disagree with the critique of amateurism. There are going to be amateurs (a lot) because some things will not be monetizable. Shirky's argument will still hold even with newer business models. Some things will be too small, (low value to this individual), to justify the decision making or attention sharing necessary to micropay it.

BTW : I wonder if Haque knows Weed?
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