Making Web 2.0 Commercially Successful

In Internet Observation  ||  2007 ||  Tags: web2.0   patents  ||  Readers: 397

 Following up on this weekend's mainstream media discussion of Web 2.0 being a better, healthier boom than the original dot-com speculation frenzy, I've had some time to reflect on the ways that Web 2.0 software can be commercially successful. Certainly, the most popular model for most Web 2.0 startups themselves is through mergers and acquisitions. In this model, you typically build a successful service with a unique identity, some hip attitude, and attract a large user base and as long as you've done it cost effectively, the attention base of your users alone probably pays for the acquisition in the eyes of the buyer.



But once acquired, how can you stay commercially successful using Web 2.0 ideas? Sure, Google, eBay, and iTunes have shown it can be done, but knowing all the workable routes is important, especially if you significantly depart from the proven advertising model of Google or the pay-per-use models of eBay and iTunes. I think the answers to this question will be fascinating. And having the various pathways to commercial success explored is one of the remaining big stories to be written about Web 2.0.

ZDNet's Phil Wainwright recently laid out the most common approaches to generating revenue from on-demand software services. What he lists are the major revenue models generally open to the kind of software services that commercial Web 2.0 companies will offer.

This just identifies the ways you can gain financial remuneration for your services though. Being successful in the Web 2.0 era is about more than just generating net revenue. It's about keeping your market share. To stay successful you have to maintain critical mass so that your continually contributed and enriched data stays better than the next person. It's about having the best content and functionality on the Web, and ensuring it stays that way. And that's where the next important ingredient to commercial success comes in. As I see it, there are (at least) four ways to have content and/or functionality that no one else has. These are patented techniques, hard to recreate data sources, copyrighted content, and secret formulae.


If you look at the big players in the Web 2.0 world, they have one or more of these mechanisms in place to keep you using their service. This might be iTunes with its music and video library (copyrighted content), Google with its closely held best-of-breed search index (secret formula and patented techniques) , or del.icio.us with the best bookmarks on the Internet (hard to recreate data sources). And for now, with open source databases like Wikipedia pounding the daylights out of copyrighted sources, you can bet that patents will become an increasing factor in the Web 2.0 world. Just like each of the big computer revolutions in the 1980s and 1990s ended with massive legal battles over who really created the best ideas, you can virtually count on Web 2.0 shaking out in the next five to ten years with battles over the legal protections established around the content and functionality of the dominant Web 2.0 players.

In fact, patents are now understood to be an integral part of a company's intrinsic worth and the issues surrounding software patents in particular are growing as the number of software patents granted has skyrocked in recent years. Expect that many players may establish and keep their dominance through use of patented capabilities and the resulting disputes will likely be a feature of the Web 2.0 revolution end-game.

What do you think? Will Web 2.0 companies have to resort to patent protections to achieve lasting success?

Drill-down:

It is used to describe articles that are stemmed from a single lead article that give a more in-depth or detailed information of the same subject.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

Chinese | English | User Agreement | Privacy Policy | Contact Us | About Us
Copyright © www.elanso.com All rights reserved.