Why Web 2.0 Is Like Pornography

About This Blog

This site is for  entrepreneurs.  A full RSS feed to the articles is available.  Please subscribe so we know you're out there.  If you need more convincing, learn more about the site.

Community

Google+

And, you can find me on Google+

Connect on Twitter

Get Articles By Email

Your email:

Google

Blog Navigator

Navigate By : 
[Article Index]

Questions about startups?

If you have questions about startups, you can find me and a bunch of other startup fanatics on the free Q&A website:

Answers.OnStartups.com

Subscribe to Updates

 

30,000+ subscribers can't all be wrong.  Subscribe to the OnStartups.com RSS feed.

Follow me on LinkedIn

OnStartups

Current Articles | RSS Feed RSS Feed

Why Web 2.0 Is Like Pornography

 


Recently, I had the opportunity to present to CommonAngels on the topic of Web 2.0.  CommonAngels is a prominent Boston-based angel investor group of which I am a member.  As part of the preparation for this meeting, I tried to figure out how to define Web 2.0 for those that were new to the concept and meme.  I couldn’t do it.

This is why I think Web 2.0 is like pornography.  I can’t really define what it is, but I know it when I see it.

So, instead of trying to define Web 2.0, I thought to cover some of the attributes and aspects of “Web 2.0ness”.  Clearly, not all of these criteria need to be met (for example, I don’t believe that a startup just has  to have AJAX to qualify as a Web 2.0 startup.

So, here are the things I think of when I think of Web 2.0.  This is intended to be an intro for those that don’t read TechCrunch, are not Web 2.0 startup founders and otherwise don’t follow the trend (but are still curious).  If you’re a Web 2.0 expert, you can safely stop reading now.

Attributes and Aspects Of Web 2.0
 
The history of Web 2.0 is a little strange because the term was coined before it actually had a definition.  Subsequently, various industry pundits ascribed various things to Web 2.0.  Rather than try to come up with a singular definition, I would describe Web 2.0 as a combination of technology and social approaches.  More broadly, I think of Web 2.0 as being the “next generation” of what can be done on the web.  

            1.  AJAXAJAX (asynchronous JavaScript and XML)   This is the technology that makes it possible for browser-based (or as I like to say, “browser-bound”) applications to behave more like regular desktop applications.  Rather than having very little “software” running on your desktop (and everything being on the server), AJAX allows parts of a web page to communicate with the server and update specific parts of the current page.  The result is a more responsive web experience.  Though I agree that AJAX is an important technology, I don’t think that it is necessarily a requirement for a Web 2.0 application to use AJAX – though most can and do.


            2.  Web As Connected Platform (Mash-ups):  One of the interesting things about the current generation of internet applications is that many are exposing their capabilities via an API (application programming interface).  This allows other application developers to use the functionality and data of multiple existing web applications and create a new service that combines them.  The result is a “mash-up” of multiple web applications that offers a new experience and new functionality.  


        3.  Advertising Revenue:  Making money on advertising on the web is nothing new.  There were many startups in the “Web 1.0” generation that sought to acquire traffic with the hopes of monetizing it.  But, two major things have changed.  First, there’s a lot more traffic on the web now then there used to be during the last bubble.  More and more users are coming on the Internet, and they’re doing more and more on it.  As such, there’s more traffic to monetize.  Second, the process of connecting advertisers to end consumers is now much more “efficient” with platforms like those offered by Google and Yahoo!.  As a result, Web 2.0 startups have several alternatives of monetizing web traffic – without having to negotiate deals with individual advertisers.  
        4.  Long Tail Effects:  This is a bit of a complicated topic and deserves an article in and of itself, but I’ll simplify a bit.  Coined originally by Chris Anderson (and now the topic of a popular book), the long tail is about how the “blockbuster hits” can be overshadowed by the aggregation of a large volume of “niche” offerings.  For example, the revenue generated from the bestsellers on Amazon may be overshadowed by the revenues generated by the hundreds of thousands of books that only sell a few copies.  The Internet makes it possible to change the economics of certain industries, making it possible to leverage long tail effects.


        5.  User Generated Content:  This idea is a good lead-in from the long tail concept.  If we accept that the value (could be measured in terms of website traffic) from aggregating lots of “niche” content can exceed the value from the “big hits” (like CNN.com), then the challenge shifts to the production of this niche-market content.  One way to solve this problem is to have the community generate the content itself.  An example of this is YouTube, an online video sharing site.  Thousands of niche videos get uploaded to YouTube every day.  These videos in turn generate traffic as other users view them.  By using UGC, companies can capture the value generated by the long tail.


        6.  Social Networking:  Social networking is about software that allows individuals to connect to each other and form online “networks”.  Usually, the purpose of social networking websites is the same as other types of web 2.0 startups – to attract traffic which can be monetized.  The oft-cited example is MySpace which is targeted at teens and was acquired by NewsCorp for over $500 million.  I see two big advantages to leveraging social networks:  First, because of their very nature, they tend to spread virally (as it is in the community’s interest for the network to expand).  Second, once a certain “critical mass” is achieved, it forms a formidable barrier to entry.  Another example of a social networking startup is LinkedIn, which is targeted at professionals.  LinkedIn is rumored to be profitable now.
From an investor’s perspective, I think Web 2.0 startups represent a significant opportunity.  However, the level of risk is pretty high.  It takes a fair amount of traffic for advertising-based startups to break even and many categories of Web 2.0 startups are already very saturated.  So there will be a large number of companies looking to close M&A transactions with a reasonably small number of acquirers.  Unless we have some high-flying IPO (like YouTube) that opens up the public markets again for web-based startups, M&A will continue to be the most likely exit path for investors.  Further, the landscape is shifting quickly, so it’s hard to really predict what’s a fad and what’s a potentially profitable trend.  Most of the Web 2.0 startups out there haven’t been around long enough to really get any true insights on what’s going to work (and what’s not).  Examples like MySpace and Facebook help, but are still only one small piece of the Web 2.0 puzzle.
 

Posted by Dharmesh Shah on Wed, Sep 06, 2006

COMMENTS

is the numbering wrong or did we miss a point?

other than that, fairly comprehensive covering of the web2.0 attributes.

posted on Wednesday, September 06, 2006 at 11:30 AM by kopos


Numbering was off. Now fixed. Thanks for the note.

posted on Wednesday, September 06, 2006 at 11:36 AM by


Great article! To find a corporate profile on LinkedIn Corporation please visit: http://techaddress.wordpress.com/2006/09/06/profile-linkedin-corporation/

posted on Wednesday, September 06, 2006 at 12:34 PM by TechAddress


Nice summary, here's another cogent attempt at defining Web2.0 worth reading:

http://paulgraham.com/web20.html

posted on Wednesday, September 06, 2006 at 6:01 PM by Byron


Hmm, links are bit tricky in this comment system. Trying again... Web 2.0

posted on Wednesday, September 06, 2006 at 6:03 PM by Byron


Good grief. Will do it the old fashioned way, then. The essay is by Paul Graham, entitled 'Web 2.0', in the Essays section of his website, paulgraham.com.

posted on Wednesday, September 06, 2006 at 6:04 PM by Byron


and with a bit of luck, the whole web 2.0 thing will make us all loads of money like the porn industry :D

posted on Wednesday, September 06, 2006 at 9:32 PM by Chris Jones


About (4), Anderson repeats on his blog that he never claimed that the long tail would earn more than the hits. Rather, he makes the vague claim that the long tail will earn more than expected. In fact, he still can't quite define "hit" vs "tail".

posted on Thursday, September 07, 2006 at 11:31 AM by Me


I agree with Chris... If the world of web 2.0 makes anything near the money that Porn makes... we'll all be rich!

{Crossing Fingers}

www.LoudIsRelative.com <--- Looking for advertisers

posted on Saturday, September 09, 2006 at 3:56 PM by Loud Is Relative


First of all, I must say that I don't believe there's Web 2.0 at all. Perhaps I'm too affected by the dot com bubble, but it feels like a buzz word to create a new bubble, as the principles in it are basically the same that Internet and the Web had in their beginings.
Having said that, if Web 2.0 means anything it's well described in your post, but for one thing: AJAX. AJAX is simply a "put-it-together" of technologies that have been there for a while, it's not something new or that makes a company web 2.0.
What I "fear" from Web 2.0 is that it gets too much attention and might leave real Internet business without venture capital :)
Well, that was a joke, but I'm a bit concerned because a new bubble will do many harm to companies that are trying to succeed after the bubble, and that might not be classified as web 2.0. My company of course is one of those: we're Internet based, mobility focused, we have a software-as-services business model, and we might use AJAX for our web administration tools, but we don't feel as Web 2.0 as we're targeted to SMEs and not to the consumer market.

Dharmesh, I've discovered your blog recently, and I find it really interesting.

posted on Sunday, September 10, 2006 at 6:18 AM by Narciso Cerezo


I agree with Narciso's comments that Web 2.0 is a bunch of put-together technologies. From a developer's perspective, the tools feel much like we're back in 1985 again. Both the user interface and reporting output are much more tedious to build within the limits of today's browsers and available tools.

It'd be more accurate to call it Web 1.9.

posted on Monday, September 11, 2006 at 12:18 PM by Thomas C. Snide


my Answer to the question "what is web 2.0?" could be something like this.
"Its an extension to exsisting technology rather then a new concept".
And why they fail? (Kikko and huckABuck) They statrted started something what they cannot use and market as stand alone tool. Thts the reason why myspace and google have succeded and made money. Gmail, if we consieder. Its really bad idea to have an startup beacuse of Web 2.0 because there is nothing new and exsisting players are doing well...
Of course,

posted on Monday, September 18, 2006 at 3:32 AM by Jigar Shah


good artical,i hadn't even heard of web 2.0 before.

posted on Friday, July 20, 2007 at 9:13 AM by webcam babe


Tim O'Reilly coined the term "Web 2.0" in 2004. In 2006, Web founder Sir Tim Berners-Lee sagely observed that "nobody knows what it means": 
 
 
 
http://tinyurl.com/y6ewzy 
 
 
 
And now in 2008, the most honest thing we can say is that "Web 2.0" means whatever the techno-marketeer (ab)using it wants it to mean. Otherwise, why would intelligent people like Isaac O'Bannon still be writing articles asking "What is Web 2.0?": 
 
 
 
http://tinyurl.com/5solok 
 
 
 
And, why would McKinsey's just-released best-of-breed report entitled "Building the Web 2.0 Enterprise" ... 
 
 
 
http://tinyurl.com/6sxls7 
 
 
 
... include no attempt at defining the term other than to list the "Web 2.0 Tools" that comprise or enable it? And even there, the chief ingredient is identified only as "Web Services", adding more mystery to the mix as one ethereal term is offered up to explain another. 
 
 
 
Bruce Arnold, Web Designer, Miami Florida 
 
http://www.PervasivePersuasion.com 
 

posted on Saturday, August 02, 2008 at 5:46 AM by MiamiWebDesigner


Comments have been closed for this article.