I was having a very brief debate with Mandy on Twitter yesterday about whether starting up a social network would be a good idea. This brought us on to the idea that the biggest problem with Web 2.0 is that there is no business model of substance behind these excellent ideas.
Take a look at Youtube; it sold for over one and a half billion dollars but ultimately how does Google see themselves making that money back off that acquisition? The same can be said about Facebook. Despite having 70 million users their business model is advertising on their site. Now don’t get me wrong that this model has been vastly successful for Google but the scale is much larger than Facebook. Facebook has certainly done well for themselves but ultimately they are an advertising medium and still offer no major business model.
Offline, no one would pay to see a video and no one would pay to “superpoke” their friends. Let me point out though that if no one is paying to use those services offline then why would they pay to use those services online?
Mandy then argued that things like payment gateways are making money but in my mind that’s not a Web 2.0 concept. Web 2.0 is user generated and something like a payment gateway is certainly not. The fact of the matter is if there is no business model available where can the money be made. It seems as though the media has hyped the Web 2.0 concept and will possibly lead to the next web dot com bomb.
Specifically in South Africa I can only think of Blueworld as a Web 2.0 offering that’s making some money. I like the whole concept of companies such as Basecamp, which offers a free but very basic service and then charges you for expanding the services. This is probably the only business model I’ve noticed in the Web 2.0 environment. Marketing is useful but frankly it is nothing novel.
Have I missed something or is the truth of the matter that there is no business plan for the Web 2.0 world?
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Interesting post. But i think you missed the advertising income at the big sites, youtube etc.
But i think you are right in most. A site have to be large to get some real income from ads on the site..
The problem is that anyone can create a pretty zippy social network with services like Ning.
I see the next step bringing the network closer to home and building personal networks that branch out using existing services like FriendFeed, Pulse, Jaiku and the other social aggregators.
Must agree with you on this one. You look at services like MXit, my younger brothers are always on it.
Yes it has a huge user base, but what are the creators getting from it?
Web 2.0 is for developed countries only. WTF is somebody from South Africa going to do on a social network? Trade coconuts?