We have been talking a lot about Web 2.0 lately as a target market. There's a lot of confusion about "Web 2.0" and if it's anything more than a buzzword. Clearly Web 1.0 is still around. I can still buy a book on Amazon or do my banking online.
Web 2.0 definitely represents a shift in the online landscape but in a way much more significant than the term suggests. Let's start with a simple calculation.
The most viewed video on YouTube, ever, is the "Evolution of Dance." Posted just a year ago, this six minute clip has been viewed 67,125,891 times. That works out to be just over 766 years. In other words, human beings have spent over three quarters of a millennium watching this man do his extremely entertaining (I must say) routine.
I shared this fact with a colleague of mine who is very active in making sure we are part of our customers' Web 2.0 solutions. A short while later he sent me this email:
"I went back to YouTube and closely examined the screen presented to me.
There's no ads, no subscription fee, they aren't selling anything....
So, how does you tube make money again?......"
Ah, now we're getting beneath the surface of Web 2.0!
The first question is, what is the definition of how to make money? You can do it the old fashioned way by actually having people pay you, but that is like SO Web 1.0. That is the notion that value only ever derives from one person having something that someone else wants. Web 1.0 was fueled by brick-and-mortar commerce moved on-line and then advertising dollars after that.
The irony is that advertising and marketing are ultimately about influencing behavior so why not cut out the middleman? Why post an advertisement on a transactional website and hope that, in the split second it's on the screen, it may have some effect? Instead the whole website can become the behavioral modifier. Technically the "face time" of that model is orders of magnitude higher.
How then does Web 2.0 intend to make money and what does it mean for the economic landscape?
The new way to attract attention is to form a community so huge and relevant that your very existence has value. Sites like LinkedIn, Facebook, MySpace and YouTube all have their claims staked in our popular culture. Some of them do have some charges but for the most part their value comes from the size and participation of the communities.
So how does that amorphous value turn in to a liquidity event for some hungry founder or eager investor? When the company gets bought out. That worked great for YouTube when Google decided that 1.65 billion bucks was a good round figure. Google already understood the value of putting itself in front of hundreds of millions of people everyday and having them spend time on the site. Acquiring YouTube provided another avenue for that. Google, in effect, advertises on YouTube with the "Powered By Google" banner. That puts the Google brand in front of human eyes for millions of hours each day, and it doesn't cost them an additional penny (well, ok, they need to keep the lights on at YouTube). Since Google does sell advertising and "sponsored links," YouTube acts as a funnel to a more traditional revenue stream.
The next question then becomes what is the value of being able to get the attention of just about anybody on earth? Why would commercial companies care that YouTube exists? If you look at the most viewed videos of all time you'll see that many of them are commercial content, i.e. music videos or some sort of promotional short. That puts money in the pockets of those who use YouTube. Going back to our simple calculation, a good video can put your face, image, brand, logo or avatar in front of people for combined centuries. Any marketing company would cut a deal with the devil for that kind of campaign success.
This all makes for another interesting sign of our times: Business 2.0.
Since these huge communities seem to coalesce rather unpredictably, businesses have to prepare themselves in a new way. You can either try to create the next big community or you can be ready when someone else does. For large companies that means stacking their decks and waiting for that next community to form. Like filling your hand with aces so that when a jack finally presents itself you're ready.
Symantec, Oracle, EMC, IBM, Dell, Google, all on huge corporate shopping sprees. While itself nothing new the difference is that some of the acquisitions are seemingly for no other purpose than to take said company off the market and, well... wait. Like a fisherman casting out lines.
In this way the winners at Business 2.0 will be the ones with the most relevant stable of companies under their control at a fortuitous moment in time. Like the hardening of concrete, business relationships will just solidify when the right ingredients come together. Not, however, due to the insightful wisdom and careful stepping of a steady pace, but from the instantaneous recognition of a social trend and having the resources to pull the trigger. We've seen it happen again and again over the past five years. Still, it is a lot more of a crapshoot than traditional business is used to. Companies can go from obscurity to relevance back to obscurity in a blink. If the meek shall inherit the earth, it sure seems to help if they start with a few billion dollars.
