…the parade is back and this time the start-ups are beating the drum of free software and services. These so-called Web 2.0 businesses give away sometimes outstanding functionality now in hopes of finding a business model somewhere down the line. In the meantime, most of these companies are tapping advertising networks and hoping to build a revenue stream (trickle?) from click traffic. (Feels a whole lot like monetizing eyeballs, doesn’t it?)
I don’t like businesses that are dependent on other businesses for their customer revenue. Effectively, these businesses are held hostage to the revenue-sharing and engineering of Google and other ad networks. It may be an easy way to get some cash through the door early on, but it isn’t sufficient to building a valuable growth business.
First of all, let me say: Chris Shipley is cool. Now let’s consider the fact that savvy users can (and do) easily install a greasemonkey script to strip out all ads from a site. Or, similarly, install an ad blocker plugin to their browser. There goes the business model of the majority of the Web 2.0 companies out there. Currently, scraping ads away isn’t mainstream, but as this business model becomes pervasive (again) and people really do see the benefit from an app that is being provided ‘free’ of charge then this will undoubtedly grow in usage. Especially if these are apps they ‘live’ in, which is now more true than ever before.
When I was at Etech06 back in March this is what struck me more than the really cool apps I saw. The majority of these apps/companies simply had no business model. My response to those who asked me how the event was: “lots of really really cool technologies with absolutely no business model.”
Anyway, as a rebut to the article, which quite frankly I agree with, there is the potential that with the new level of interactivity evidenced among this new breed of web apps by which users are involved in content creation, that this can be mined for market trends/patterns/interests with a new level of granularity not previously accessible from the passive days of the Internet.
Aaron Fulkerson 