

Web 2.0, Revenue Models and Profitability: A Web 1.0 Comparison - humanlever
http://www.centernetworks.com/web-2-revenue-models

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jobenjo
The lameness of this article is that he's making all of his conclusions on 3
big companies. That's an enormous generalization.

He's missing the whole lean, mean segment by looking only at the top.

Try comparing the sheer number of companies during 2.0 and 1.0, and you'll
start to see the difference.

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samwise
I was gonna make the same comment. Since when was web 2.0 (hairs goes up on
back) about 3 companies.

If you need a real example of lean companies look no further than YC
companies.

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biohacker42
Am I the only one who remembers the first Web 2.0 companies, before the 2.0
buzz word was around?

I'm talking about Flickr, the early Flickr, how lean and neat was that!

Can we now look forward to more creative and lean things? At least until Web
3.0 rises to drown it all in money and unoriginality, again.

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fallentimes
I still don't know what web 2.0 means. As far as I can tell it was coined by a
publisher to sell more books.

Sounds like what consultants/talking heads do to move those awful self-help,
get rich quick, business books.

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iamdave
Again, I must run and hide behind the great work Twitpic is doing.

<http://blog.twitpic.com/2008/12/be-yourself/>

 _Twitpic is self funded and ran by one guy from his apartment_

He does it because he loves it, not because it pays the bills. Does everything
HAVE to turn a profit?

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mixmax
If it's a business with shareholders and investors it does.

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rokhayakebe
Someone mentioned a while back that advertising is a business model for web
properties just as much as it is for tv shows/sitcoms. The shows that make
money have a significant loyal audience. The few that charge money to the end
users have a content their audience can't seem to live without (read porn).

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patio11
I'd be interested in hearing the definition of pornography which covered
Basecamp, CrazyEgg, that WoW guild hosting app I heard about earlier, or for
that matter Bingo Card Creator.

"But Patrick, that's not fair. You're talking about real companies that have
paying customers. I'm talking about 'web properties' that aim for userbases
the size of nation states, and accordingly have to aim for the broadest
possible reach and the poorest possible customers."

But _why_ are we talking of those? The model demonstrably fails when you can
afford to throw hundreds of millions at it. The "We provide value to customers
and all our employees keep their clothes on, thank you very much" model has
worked for thousands of sales in a year, tens of thousands, hundreds of
thousands, millions, hundreds of millions, etc...

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eli_s
I think the author makes a very good point.

"the fact that offering free, advertising-supported services to millions upon
millions of people is not a lean and- mean undertaking"

and

"They figured that the revenue and profits would come eventually but clearly
that was putting the cart before the horse"

I see lots of people on HN building great products who have clearly not asked
(and answered) the most important question: How will my service make money?

It should be becoming painfully clear that layering advertising on top of a
useful service does not work.

Adsense works because it puts _relevant_ ads in front of people who are
already searching for something.

FB users are connecting with friends not looking for products.

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jwesley
"Web 2.0 is not like Web 1.0. It's in a special (ed) class of its own."

The author clearly does not get it. Profitability is not a "pipe dream" for
companies like Digg and Facebook. If profitability was the only objective, I'm
sure they could achieve it. The pipe dream is attaining the massive scale
necessary to build a publicly traded company.

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TomOfTTB
Actually I think you don't get it. What you're missing is that the whole
purpose of this article is to refute the thinking that you obviously subscribe
to (given your comment).

So it isn't that he doesn't see your point of view it's that he thinks you are
wrong (he obviously sees your point of view because he wrote a whole article
that's clearly intended to refute it)

It seems to me that, by thinking he must be too stupid to see your point, it's
you who are missing the point. I mean, he might not be right but at least he's
got enough perspective to see that there's another side to the argument.

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jwesley
"The whole purpose of this article is to refute the thinking that you
obviously subscribe to (given your comment)."

What type of thinking is that? That VC companies are required to shoot for the
home run exit? That's not a mode of thinking, it's the reality of the VC
industry. Lean, efficient, profitable companies are great, but unless they aim
to become big businesses they are not VC worthy.

As for the other side of the argument, I must be too stupid to see it. All I
could glean from that convoluted mess was that Digg and Facebook should be
more like Google and eBay.

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cstejerean
For the VCs to have a big exit the company eventually most be profitable, very
profitable. That has to be the ultimate goal. But to get there you can't just
keep giving things away for free and hope that one day you'll magically figure
out how to make money.

Even if you'd rather shoot for being acquired, it still makes sense to try and
reach profitability as soon as possible. If you keep living on VC money
forever sooner or later you run 2 risks: 1) the VC money will dry up, like in
a bad economy 2) the valuation of the company gets so high it doesn't make
sense for anyone to acquire you.

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ojbyrne
For both of the companies referenced, the founders have been reported to have
"cashed-out." I don't think either 1 or 2 is part of their thinking. Just
follow the standard VC Web 1.0 agenda - get big fast. Home run or complete
failure.

People seem to have forgotten all the failures that produced. VCs are fine
with 9/10 complete failures, as long as there's 1 home run.

