Tuesday, July 18, 2006

Interoperability and Monetising Web 2.0

Following on from my earlier post about automating the build process, I thought I'd add a bit more about interoperability.

It's this commitment to interoperability that I love about the OSS movement, more than any of the ideals and ideologies and motivations behind it. In general, it seems that commercial software tends to be designed to interoperate only with other tools from the same vendor (yes, Microsoft, I'm looking at you), whereas OSS tools tend to like to interoperate with just about anything they can. Of course, that's a sweeping generalisation, but I'm talking trends rather than specifics here. Java itself may not be fully Open source yet, but it's getting there.

Interoperability is also one of the big changes in Web 2.0, much more significant in my eyes than whizz-bang AJAX interfaces. The first dotcom boom was all about control and ownership of information. So many of our business conflicts and process difficulties at Rocom on the Data eXchange project (gotta love those great-big-feck-off X's in project names) boiled down, in the end, to a question of "who owns this information?" Web 1.0 business models were all about monetising content, getting people to pay for access to information, locking it down and charging for access. You want my product data? Sure, but it'll cost you X per Y products...

Web 2.0, on the other hand, is all about openness, of information and APIs. You want my product data? Sure! You want to help sell my products by showing them on your site, of course you can! RSS or Atom? Do you want a SOAP-enabled web service with that, so you can write a desktop client? No problem... API keys are over there, just by the chocolate sprinkles... however, providing syndication and API services can be costly, both in terms of bandwidth and server resources. So what's the incentive?

The question of how to effectively monetise a Web 2.0 business is yet to be fully answered, of course. The famous "Three A's" business model - AJAX, AdSense and Arrogance - is really just the same as the classic Web 1.0 business plans of "we'll get 10 million hits a month, and generate all our revenue from advertising", and it's not really any more viable now than it was then.

As ads become more-and-more intrusive (those pop-over Flash ads that appear right in front of the content you're reading just make me want to run through a shopping mall with an Uzi, I'm afraid - sorry to any Flash developers who make those for a living that might be reading) - ad-blocking tools become more and more sophisticated and widely-used, and the arms race continues, just like spam. The only media that can survive solely on ad revenue are the traditional print media, where blocking the ads is either not feasible, or not worth the effort. Even TV ad revenue is declining (third video down) in the face of TiVo and other similar products - advertisers are unwilling to pay for face-time with viewers who effectively aren't there anymore.

On the other hand, web-based mash-up services that depend entirely on the availability of third-party services like Flickr or Google Maps, or even del.icio.us, are also building their houses on sand. The systems analyst side of me says that if you build your business model to depend 100% on a third-party who provides their service for free, then you need to rethink your business model!

But it's here that I think the big service providers may be missing a trick. A basic Flickr account costs nothing, and gives you a taster of the service, enough to make you want to sign up for a low-cost Pro account. But how about providing another tier of service above that, for the mash-up businesses that depend on availability?

Why not provide a cordonned-off cluster of high-avaiability servers with a dedicated support team, available only to a dependent business who's willing to pay a premium because they depend on it?

I haven't done the sums myself, I admit, but it's another way of monetising your Web 2.0 services, and provides a revenue stream to get some payback for your openness.

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