Web 2.1

Usually I talk about politics here, with slight detours into science or arts or things like that, but on the sixth anniversary of Casual Asides, I've decided to turn to the foundational element of this blog: technology—specifically, the World Wide Web. Six years is a long time on the Internet, and even longer in the blogosphere. Allow me to quote my first blog post:

I've had a homepage since 1995. When I was in high school and the Internet was so new and all, I spent a lot of time on my web page. Eventually, the Internet became my trade, and I stopped updating my web pages in favor of paid work.

But lately, I've been clicking around the blogosphere, which has become the most interesting web phenomenon in recent years. It reminds me of the old Internet, which was about interacting with people and greater access to information, rather than the new Internet, which is about figuring out new ways to send you advertisements for toner cartridges and porn.

So, what have I learned in the past 6 years? Lots of things, usually in the extremely laborious researching of almost 290-odd posts. I can't tell you how many spreadsheets I've made or hours spent researching a point which I ultimately had to edit out of the piece because my assertions ended up being unfounded (which is just fancy talk for me almost saying something which was dead wrong). I also have pages and pages of stuff left unfinished, some of it years old. But today's topic is not me: it's the Internet.

The phrase "Web 2.0" was coined in 2004, according to Tim O'Reilly:

The concept of "Web 2.0" began with a conference brainstorming session between O'Reilly and MediaLive International. Dale Dougherty, web pioneer and O'Reilly VP, noted that far from having "crashed", the web was more important than ever, with exciting new applications and sites popping up with surprising regularity. What's more, the companies that had survived the collapse seemed to have some things in common. Could it be that the dot-com collapse marked some kind of turning point for the web, such that a call to action such as "Web 2.0" might make sense? We agreed that it did, and so the Web 2.0 Conference was born.

So, in the wake of the collapse of the Web 2.0 economy (which was suspiciously like the Web 1.0 economy with slightly less money), I present to you:

Rules for Web 2.1

Information wants to be free. Charging for content is so 2004.

You can't patent a business model. This is merely a legal reality, but an important point, considering...

Too much venture capital is killing revenues. As a corollary to the above point, the problem is that at the point where you want to monetize a free service and/or the lack of available funding for R & D becomes an issue, there will inevitably arise a competing site on the upside of a financing curve. This is particularly a problem because...

Customers are not generally loyal in the long term. The Web 2.0 model is that you come up with a great idea, turn it into a free site, create a huge following, and then drive your user base away by screwing up the site. The exact way you screw up a site may vary, but it always comes down to asserting ownership of the space you've created in a way that lessens the value of the product. Sometimes it's your users themselves who destroy the service by trying to monetize it by spamming everyone else who uses the site. Which brings up another important point...

Advertising is bullshit. Truly a victim of its own success, the more successful advertising has become, the less successful it is. Continuing the theme of information technology being too powerful for its own commercial good, the web came with revolutionary metrics; the problem is that it exposed exactly how ineffective advertising can be. I watched click-through rates fall from 5% the year the first banner was introduced to 2.5% the next and so forth, arithmetically. In the old days (of the brown-shoes), a company paid an advertising firm to sell the company's product to the consumer and the advertising campaign to the contracting firm; you could never accurately gauge how effective an ad campaign was. That inefficiency in data gathering meant that it might have been the ad campaign that boosted or cratered sales, but you couldn't tell with any certainty. Now you know exactly how few people make the full trip from advertisement to virtual cash register.

You don't make money on data, you make money on relationships. Information may want to be free, but trust can be earned—or bought. It can also be betrayed (see above).

Data is portable, presentation isn't. Data is becoming platform independent. Many people apparently read this blog via bloglines or rss. All that CSS and graphic design for naught! I shed a tear, I really do, but that's the trend away from the problems of ownership described above. People want the steak, not the parsley.

Brace yourself for perfecting competition. Have you noticed a theme here? It's that information technology is perfecting marketplaces too fast for firms to adjust while maintaining their profits. In prefect competition, profits are always driven to near- or at-zero. Profit requires monopolization.

Keep it simple, stupid. That's why this post is so (relatively) short.

Next time I'll be talking about Web 2.2; after that, Web 3.0. Stay tuned.

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