Quality Reads

Wednesday, January 10, 2007

The Over-Marketed Early-Adopters

Warning....This falls into the rant category.
I just glossed over this list of the Top 100 Web 2.0 sites posted on digg. People have been prophesying the Web 2.0 burst for a year or so but for the first time, after checking out this list, I think I agree. Below are all the websites from the aforementioned list which actually charge for their service:
  1. Sprout (Hosted Email Management)
  2. Jajah (VoIP)
  3. Skype (VoIP)
Wow, I stopped looking for paid services because I had to include Jajah and Skype just to make a list. They barely charge for their services, only for certain long-distance phone calls. How are the rest of these services structured? All advertising-Based?!? Unless you have massive, consistent web-traffic, most organizations can't convert an advertising-based business plan into a substantial, sustainable revenue-source. Keep this statistic in mind. The combined yearly revenues of Digg, Del.icio.us, and theFacebook.com don't match the daily revenue of a single Costco.

Web applications that intends to use advertising should have a strong reason built into the product. Pandora, a web-based personal dj, is a great example. A flash music player only takes up a small section of webpage providing ample advertising real estate. Also, its radio-like nature gives it precendence in the advertising-based business realm. They are utilizing a proven approach that traditional companies are open to.
Another thing Pandora seems to get right is they're selling ads for their web space in house. It amazes me how many advertising-based sites seem to be using Google Adwords. Horrendous. FYI, if you run one of those websites, a 900 pound gorilla is gobbling up the majority of your income.

Why don't more websites charge for their services? Some argue that people don't like to pay for online services -- advertising is the only way to create a cult-like following found with the big 2.0's.

Why don't more people purchase online services? I always have concerns when purchasing an online service that I'll read an article tomorrow telling me about a comparable FREE application. If you really standout from the crowd that shouldn't be an issue.

Checkout all the duplicates:
  1. Personal RSS Feed Aggregators
    1. Tiny Tiny RSS
    2. Klipfolio
    3. Google Reader
    4. InstantFeed
  2. Web-Base Microsoft Office Replacements
    1. ThinkFree Office
    2. Zoho
    3. Google Docs & Spreadsheets
    4. EditGrid
  3. Video/Photo Sharing (one of these is a fake service, see the bottom for the answer)
    1. Flickr
    2. VideoSift
    3. MotionBox
    4. Dabble.com
    5. Vimeo
    6. FotoFan
    7. YouTube
...and the list goes on

The defining characteristic between Web 2.0 winners and losers will be tangible product differentiation in the eyes of the average user. Tangible as in: x integrates with y much better than z does. Moreover, tangible in the sense it that the average person can understand its purpose. You can't get someone excited about Google Reader if they've never heard of an RSS/Atom feed...even worse, if you explain the concept and they don't understand why its useful.

PS-FotoFan was the fake service listed under Video/Photo Sharing


Brian said...

"tangible product differentiation"? puhlease. I think I just won bullshit bingo with that triple word score.

Web 2.0 sites that chase money may be swallowed up by other bigger fish, but it doesn't make them great services. It's not all about who has marketable products.

There is life beyond capitalism, as a band rabid Wikipedians would surely tell you. It's not always about making a buck.

Todd Cullen said...

True, not every venture is about making money. But I seriously question whether the majority of those sites will even be able to cover bandwidth/server costs. Yes, their business plan is that bad.