I have been working in the interactive media industry for over 15 years and have seen the internet grow dynamically from humble beginnings through to dotcom boom and bust and then back to growth and web 2.0 hype. I am Managing Director of Berlin based startup tsoosayLabs, where we have just launched ShopWindoz. I live happily in Prenzlauerberg, Berlin with my wife and twin daughters.
Hype over
Now all the hype is (mostly) over I find myself along with a great many entrepreneurs, founders and investors are wondering what happens next. Clearly we have witnessed something important over the last 5 years a democratising shift on the web bringing a wealth of new technical innovations, standards and interoperability and a change in user behavior online that is driving the growth in social networks - something significant has happened, a tipping point or whatever you may want to call it. As O’Reilly the self proclaimed ‘inventor’ of web 2.0 pretentiously puts it “Web 2.0 is a transformative force that’s propelling companies across all industries towards a new way of doing business characterized by harnessing collective intelligence, openness, and network effects.” I agree to this statement, however this vision is currently a technical one and doesn’t really address the reality of building a real business on these principles and actually making money. Most of the companies who are driving web 2.0 (apart from the Yahoo’s and Google’s who make money from advertising) are still struggling to monetise the phenomena in a sustainable, long-term way, instead chasing short-term key performance indicators in the hope of a successful exit. I am hoping that the arm waving web 2.0 evangelists and conferences organisers start to take this into account and start to apply their thought leadership to the challenge of monetising web 2.0 and building sustainable businesses from it.
Investors losing confidence
The over hyped darlings of web 2.0 are still riding the wave of angel/VC funding gained from early market moves and with audience numbers growing - and are looking at a future of being bought out by Microhoo or whoever. This conveniently steers away from the business model problem but also means that web 2.0 companies don’t have to get creative and find a real business strategy - thus the danger is web 2.0 is becoming a fluffy add-on for traditional ‘business as usual’ (advertising/subscription/commission) web sites and is not redefining or transforming anything from a business model perspective. This is a real shame as the potential to test/iterate/improve any kind of models on the web is possible. There is evidence (and I have first hand experience) that many investors are losing faith in the web 2.0 phenomena, after 5 years of experimentation and ongoing investment there has been little to show in terms of real returns. Investors see the only real opportunity to realise any cash is to jump on the already successful 2.0 players…consolidation is coming (just like last time) and the big guys will get bigger and the smaller underdogs will sadly disappear. FT.com have an interesting article on this, claiming that this coupled with the coming economic downturn will help to dampen investor attitudes towards social media and drive many startups into the ground.
Business unusual
The fact that mainstream audiences are adopting new and innovational services is great and what many of us who have been working the web for over a decade have been waiting eagerly for - the only snag is how do we go about building new and sustainable businesses on this. Most current web services are positioned as ‘free’ which is great from a consumer perspective but leads to situation where web 2.0 businesses are not monetising their core assets (content, levels of user engagement, …). Obviously there are opportunities to charge for add-ons and exclusive content but it takes a long time and a huge audience before this makes sense. Other web services are ‘free’ but only until a point comes when they feel comfortable charging customers, this point being one of critical mass and concept being tested and proved - this is also a challenge with fear of drop out when charges are introduced. So clearly there is a need for for some new thinking here, thinking that addresses these challenges and also leverages the collective intelligence, openness and networks effects that are web 2.0.
Categories: Home · Opinion · Web
I saw this graffiti next to my local cashpoint and was curious. It (roughly) translates toCategories: Brit In Berlin · Home
http://www.myspace.com/shopwindoz
http://www.facebook.com/pages/ShopWindoz/9364658449
http://www.iqons.com/shopwindoz
http://flickr.com/photos/shopwindoz
http://twitter.com/shopwindoz
Categories: Home · ShopWindoz · Web · Working
Categories: Home · ShopWindoz · Working
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