Wednesday, August 22, 2007

Web 2(founders).0(revenue)

I just can't get over the tag line from Don Dodge's post on the state of Web 2.0 applications:

I think Web 2.0 stands for a web app, 2 founders and zero revenue.

His post is an interesting look at what I've hinted at previously, the saturation of the web market in the past year with sites that feature some interesting (or even revolutionary) twist on social connection combined with slick functionality but really no thought on how to actually monetize their idea. The WSJ article he quotes also gives some good examples of how this is feeding into the push by VC's to dictate that sites need to have some sort of advertising revenue model when it isn't appropriate in all cases. Don also includes some good, albeit somewhat obvious, examples of successful models to monetize Web 2.0 sites.

I also picked up on a post from Perry Evans yesterday where he speaks to the death of search as the primary driver of traffic to sites. He includes a couple of articles that point to how new users (specifically the young) are not using the traditional means of Google searching and yellow pages searches to find what they want. Instead this new social connection phase is causing users to rely on their personal networks or aggregated preferences on sites to drive their discovery. This results in people approaching the internet in a different way, one which the traditional SEO techniques don't handle.

Extending from that, I was reading an article from Venture Beat on the Facebook development platform where Kevin Barenblat debunks some of the myths surrounding Facebook applications. I particularly liked his section on NFO being the new SEO:

News feeds that appear whenever a users adds or interacts with an app are one of the most important marketing channels freely available on Facebook. Many applications count on news feeds to drive growth among the users’ friends. However, activity among Facebook’s 33M+ users (half of whom log in daily) generates trillions of news feed items. To provide the best user experience, Facebook culls those down to a digestible number of feed items it thinks will be most interesting to you. The result is that less than 0.2% of possible news feed items actually show up in feeds. And because news feeds are one of the best ways to reach out to users, expect a News Feed Optimization (NFO) industry to develop just like Search Engine Optimization (SEO).

Lots of interesting things materializing out of this two founders, zero revenue trend we have going on. It is exciting to watch and see where this all leads over the next year or two!

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