An update on Web 2.0 economics

An update on Web 2.0 economics:

  1. Web 2.0 fails to produce cash | / Companies / Media & internet

    ‘Nuff said. Tags: 2008 economics internet business news

  2. Failing Web 2.0 stars pray for copyright abolition | The Register

    The Register’s take on the story: Web 2.0 was “interface” level people trying to solve “infrastructure” level problems and VCs have spunked $1.5bn of cash at the Javascript kiddies in vain. Tags: internet technology news 2008

In the end, Web 2.0 is a set of cool programming techniques (so long as you don’t mind huge downloads to display a single page) – it hasn’t created new revenue streams. The investors seems to be paying attention to what everyone’s been saying, at last.

At the moment, money is being made (I hope) by consultants like Puffbox/Simon Dickson who have understood how to bring the technology together to create value for their clients, but part of this this model is dependent on free media hosting in “the cloud” by YouTube, Flickr etc – what happens if/when that stops…?


About Peter Cruickshank

Lecturer in the School of Computing and a member of the Centre for Social Informatics at Edinburgh Napier University, Scotland. Interested in information systems, learning, politics, society, security and where they intersect. My attempts at rounding out my character include food, cinema, running, history and, together with my lovely wife, bringing up a cat and a couple of kids.
This entry was posted in Daily Links, news, Techie and tagged , , . Bookmark the permalink.

5 Responses to An update on Web 2.0 economics

  1. SimonD says:

    Thanks for your concern Peter. Don’t worry, the mortgage is getting covered every month. 🙂

    You make a fair point about YouTube and Flickr. But I’m confident they’ve reached a critical mass, whereby their respective owners couldn’t seriously contemplate withdrawing the services (almost) regardless of their profitability. In a worst case scenario, yes, I bet there would be a day or two of panic. But when you consider the benefits you’d already enjoyed, you’d still unquestionably be in credit.

  2. Peter says:

    That’s great to hear Simon – I’ll be able to sleep soundly in my ivory tower tonight 🙂

    I think you’re right about the panic only lasting a day or two, assuming you still have backups of the media files that is. If it came to it, it wouldn’t be that difficult (or expensive, once set up) for a business like yours to include media hosting as part of the package you offer your clients.

    As for Web2.0, at least this time is the money has been lost by big corporations (eg Google/YouTube, News International/MySpace) rather than excited individuals buying into dodgy IPOs as happened back in ’99.

  3. Nick Booth says:

    Hi Peter,

    Wont the money follow the attention? Advertisers will go where the audience is? So if web 2 tools and techniques help build an audience (as they do) that will ultimately provide an income stream.

    It’s a rather thin article. Doesn’t consider how web 2.0 is helping individuals and small business build value and customer base by engaging in an online conversation with existing and potential customers.

    Is there something you want us to go back/forward to?

  4. Peter says:

    Hi Nick

    Fair points.

    I’m not arguing that Ajax/widget technology isn’t good and useful (despite my sarky remark about the large page sizes that result). And Web2.0 certainly allows users to leverage a lot of useful functionality very quickly (just ask Simon)

    I guess my point is that advertising is still the only game in town when it comes to making money directly off a website. If the advertising revenues don’t justify the server & bandwidth costs, some day the corporations will cut back. As Simon points out, YouTube and flikr are probably so big they can’t be allowed to fail, but there will be others that will disappear, possibly along with their users’ data.

    All I’m saying is I think that where advertising is inappropriate (eg many government contexts) or will never cover expenses, the costs of Web2.0 will have to be directly born by the client, possibly through a service provided by their internet or communications consultants

    So in conclusion: I’m not wanting to go back at all. Web 2.0 has been a tremendous enabling technology, it’s just that those of us who use it as part of their core processes have to be aware of two risks:

    (a) That the service(s) could be withdrawn by their providers as part of corporate cutbacks, at best causing disruption while an alternative is found and configured

    (b) Uncontrolled access to your information – eg through data-mining by the host companies, or other governments’ police taking an interest in what you’ve stored in the part of the cloud that happens to be hosted in their jurisdiction (another hobby-horse of mine)

    Phew, that was a long comment! Might even write it up as a standalone item – but I’d be interested in what you think.

  5. Pingback: ReadWriteWeb « Spartakan

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s