Struggling to Monetize Web 2.0

This one of the most insightful articles on web 2.0 that I've seen for months. I hope Michael Arrington from techcrunch reads this. I dont see how "Give it away and good things will happen" is a viable business model for anyone but the open source community.

It's hard to think of something that could not be argued into one of those three categories. How about productisation? If Wikipedia sold books containing highlights of its content, what would that fall under? How about if Flickr started a cable channel to leverage its visual content? Maybe Memeorandum could license its daily clustered feed to newspapers?

It seems to me that most of the data/content produced by Web 2.0 sites/services is simply too random. It reminds me of the saying "How long would a million monkeys have to type on typewriters before they produced the novel War and Peace?".

The answer to the million monkey problem is survival of the fittest

I certainly do not agree with models that undo the essence of web 2.0 which is the culture of openess (to produce, share, remix and receive content). Subscription and walled gardens models will instantly place any activity out of the web 2.0 world and into more traditional schemes. We see web 2.0 as user generated and remixed content with still very hybrid text based interfaces. So value could be generated from: * offering the frame for communities formation and then selling ads * creating higher quality user experience

Why does a business model have to be a new one? Why would none of the already known business models work? I still buy bread the same way my ancestors bought it. Things don't change quite so quickly, just because they are on the web and are versioned 2.0.

IF mashups can figure out a way to make money, their data sources could charge them for API accesses. It's an old model in the Web 2.0 context.

Otis, it has to be a new model for the reasons I listed:

Dion, I wouldn't want to be responsible for a company that needed to wait around for a new revenue model to emerge. Which of my guys is in charge of 'creating new revenue models'? The VP Engineering? VP Sales? VP Marketing? Who's accountable for making this happen?

I like the micro-payment idea. Maybe some sort of syndication thing might work - your micropayments could pay for services on more than 1 site. There are probably ways to highlite more traditional advertisers products/services in manners which aren't ugly and/or intrusive. Whoever figures that one out pretty much wins the internet game, I think.

I think that we might focus a bit too much on the _web_ part of web 2.0. Since one of its major elements is pervasiveness - web 2.0 isn't really about web sites or browser based applications. I know we all know this - but even I keep falling back on browser-based concepts for information provision and user interaction.

TAD,

Do you know any new ways to make Web 2.0 services generate revenue?

We plan to charge for value added services. Somebody experienced in a fortune 500 company once told me that its the way to go. Presently, open brainstorms are free on http://www.brainreactions.net but private brainstorms (no ads plus unlisted, therefore secured from spam, access restricted only to those who know the URL with key) cost 99 cents per month. This can be categorized as "subscription" model, but I think there is a difference in being a value-added service model as opposed to being completely subscription based.

I always enjoy reading Dion's enlightful web2.0 blogs but don't think there will be 4th or 5th business model categories other than Phil's 3 revenue models. Commercialization of web2.0 will actually reinvent the existing three models. To date, the ad category in broad sense advanced relatively faster than other two. Google's success on long tail sets a good example of performance driven ad placement (charge by click-thru as opposed to banner view, we should give the credit to early web1.0 experiments by DoubleClick, BeFree, LinkExchange). Such unique ad campaign doesn't exist with traditional media (newspaper, radio, TV). Ebay gives us another good example with the transaction model. Google and Ebay do differently from the conventional advertising and trading but still they are in these two categories.

While I do buy the 'charging for value added ' service I disagree with the idea that removing ads is any value add.you basically introduced an annoyance and are charging for removing it.Even Opera now gives the ad free browser free of cost.

While I do buy the 'charging for value added ' service I disagree with the idea that removing ads is any value add.you basically introduced an annoyance and are charging for removing it.Even Opera now gives the ad free browser free of cost.

I'm no expert, but haven't you forgotten another revenue model? What about the "tip jar"?

Well I am no expert either, but my two cents are here anyway:

web 2.0 content is like the air we breeth, or the light that illuminates our day. "monetizing" that will not be easy, but it sure is a big enough challenge worth of trying. I would start to solve this puzzle this way: Look around you, what do you see? .. A house, a room with walls. Yes. And the window - to let the sun shine ... and the ventilation, to bring the air in. Sure it is possible and even easy to find revenue models for letting the information flow! Just look at the IT-system-walls people and companies are now surrounding and separating themselves with!

I'm weighing in way after the fact on this monetizing discussion, but wanted to second Paul Montgomery's idea of the potential of "productizing" the data that users create. I've been thinking a lot about this in terms of online patient communities, where people, especially those living with chronic conditions, post incredibly valuable information on their experience with treatments, side effects, best practices in dealing with the healthcare bureaucracy, etc. I think this is data with commercial value, and could also help empower patients to "speak truth to power," whether power is represented by pharma companies, insurers, etc.

I agree with productization. Also, about ads, I click them because i know they help support the site I like and go on everyday or w/e that I want to keep running. And it doesn't cost me a dime.

Hi,

> Do you know any new ways to make Web 2.0 services generate revenue?

I've written an article why web 2.0 applications WILL work - but it could take some 10 years. Let me know what you think. On myuninstalledlife.com I'm trying to uninstall everything from my desktop and replace it with web applications - and I mean EVERYTHING, I just don't want to replace the apps but also keep 100s of gigs of data online. The address is www.myuninstalledlife.com

I am working for an ISP and I can tell that it is very hard to find a good web2.0 like products that I can distribute (ie charge per month to my customers on a subscription basis)... The media model is very classical but it is very strange to me that other companies do not try to use the distribution power we have to build on their business (and help mine by increasing my customer arpu).

There are no other models.

Ricky let's try with a Fonzie like thought:

I am no expert either in Web 2.0 monetization, but can claim some experience in other software products. I agree with some others that the value that customers/consumers perceive is what will drive the model. del.icio.us, as someone already noted, will never succeed if customers have to subscribe to use the service. On the other hand, as a paying user of Backpack from 37Signals, it is easy for me to justify the few $ I spend on it every month, since it helps my productivity and I have become dependent on it. While I am equally dependent on del.icio.us, if I had to pay for it I would seek another solution. I am sure there is room for more business models down the line, but in the current climate, depending on the perceived value of your service/product, all three models listed above would fit most cases. I do think that advertising is underrated, even though I almost never click on ads.

www.USuggest.com allow the bloggers to make some extra money through recommended products directly from within their blogs, and hopefully directing their readers to the some online retailers. As such, the respective blogger would receive a commission from any sales generated through referrals!

I hope web2.0 can earn money.

The Online Advertising Playbook references three new models of advertising that will exemplify the future of Web 2.0 monetization - they are as follows:

Great post! I agree that if Web 2.0 companies can't figure out how to monetize their application then they might just be a marketing medium for larger companies. We at http://www.bizak.com are not coming up with ideas on how to monetize Web 2.0 but we are coming up with a platform where startups can compare their profitability and valuation to others.