Web 2.0 – Where's the money?

With just two weeks until the d.construct conference on web 2.0, I find myself spending an increasing amount wondering how this whole web 2.0 craze is going to work itself out.

My problem is that I see many scary similarities between web 2.0 and the dot com boom. Take for example digg.com. I love digg.com. It’s a great site. I love the concept of a social news website. I love its use of AJAX, web standards and all those other buzzwords. I was stoked to hear yesterday that Kevin Rose (the founder of digg.com) has raised $2.8 million to expand the site. All good news, but I am left wondering how the site will pay for itself. Kevin on the TWIT podcast explained that the additional funding was required because advertising didn’t even cover their server costs. If advertising isn’t going to pay for the site, what is?

I am worried that once again we are seeing an explosion of sites that use cool technology and have cool ideas but lack a sound business plan.

And it’s not just the web 2.0 flagships

I am very conscious that recently I have been banging on a lot about return on investment but I can’t help but bring it up again. Not only does this apply to sites like digg.com, which epitomise web 2.0, but also new bits of web 2.0 functionality you are considering adding to your own site. For example, ask yourself, is it worth adding a drag-and-drop shopping cart to your ecommerce site? Will that generate more sales? Will it increase customer satisfaction?

Jumping on the bandwagon

Why do we always do this? Every time a cool new technique or technology emerges, we all jump on the bandwagon and start applying it randomly to our projects. Take flash. Remember those days when we would slap a flash animation on the front of our sites just because it looked cool. Are we not in danger of doing the same thing again with web 2.0 and AJAX? Not every site needs to be AJAXed up to the hilt.

Profit isn’t a dirty word

As with all new trends we need to carefully consider when and how to use web 2.0. We need to understand how they ultimately will make us money, because believe it or not that is why the majority of websites exist!

  • Jonas Geiregat

    I’m scared to, I think the first problem emerged when we gave it a name. We should stop using the name web 2.0, who came up with that name anyway ? Was there ever a web 1.0 or a web 0.4 or web 1.7.8 ?? I don’t think so, so why name it web 2.0 and what’s with the zero ? why not just web 2 ?
    The whole technologie behind ajax which is basicly the XMLHttpRequest object isn’t new at all. It was first implemented by Microsoft in Internet Exlorer 5 (a while ago) we just never really made use or found a use for it.
    I think we’re finally seeing the light in how the web should work and how to implement it. So stop breaking things by giving it a name. And if you want to give it a name I suggest you name it ‘noah’s natural evolution’. Read the bible if you don’t understand what I mean.

  • Many people have been hung up on the name issue. I really couldn’t care less one way or another.
    What I am not sure about is whether you are right when you say this is the way the web should work. I have seen some shocking uses of AJAX that are a step back in web usability. AJAX in particular really reminds me of the early days of flash. It took us a long time to realise that sites built entirely in flash aren’t such a good idea and that if not handled sensitively flash can be down right annoying. I think we will need to go through the same learning curve with AJAX.

  • Jonas Geiregat

    You can’t possibly build a whole site , with AJAX. If you click on a link and it renders the new content you’re back button is completely useless, which will confuse users. (this is just an example). But I agree with you , if that’s what you’re saying, that you have to use AJAX only when you really need it or think it’s a step forward.

  • Hell I have seen loads of examples when AJAX breaks the back button. People are still learning how to get the most out of it at the moment, which if fine. Its going to take time for us to learn how best to utilise it.

  • Changing the topic focus just slightly, I think a podcast on “profitability” would be useful to the boagworld community.
    Back a few years ago I had a client who wanted all the bells and whistles of a flash site, and yet had no offline advertising or marketing strategy. He definitely suffered from the “if you build it they will come” (Field of Dreams) mentality.
    At the time I was much less experienced and anxious to earn some money, so I accomodated his requests, not really understanding anything about ROI (return on investment). After a couple of months all the keywords he wanted to be found with in Google worked great, and if you typed them in, you could get his site as the numer 1 hit on Google.
    Despite having some success in ranking results with Google, in the first year he did not have 1 client generated from a lead via his website. After the 2nd year with still no success, he chose to take the site offline and let his server space and domain name expire. So despite a big investment in design and pretty good placement with Google, it still didn’t recoup his money from any sales leads generated by the website.
    I am afraid I’m not the only site designer who has had similar experiences like this. So a show that focuses just on ROI and profitability would be great. I think that a designer’s job is to design, not market or advertise (especially if you’re a one-person show) for the client. Having said that, I still think we should try to advise our clients as best we can about the risks involved with their investment in our services if they do not have an advertising and/or marketing strategy aside from the web site.
    What do you you think?

  • Jonas Geiregat

    As a designer I can imagen it’s very hard to find a good marketing strategy , I wish I had some good resources on the subject but I myself haven’t found any yet. There are probably lot’s of good books related to the subject out there. I also think it would be a interesting topic to touch on one of the following episodes.

  • Leigh Howells

    I propose the name VIM to be used from now on instead of Web 2.0. Then we will have an under-the-sink load of cleansing products, Ajax, Flash and VIM.

  • Doing a podcast or blog on ROI would be interesting. The problem is that its not always an exact science. Most of the time it has to be a “best guess” as to whether you recover your investment or not. The trouble is the majority of web site owners don’t put much thought into the subject at all.

  • Jonas Geiregat

    Why VIM, are you refering the that great editor ? If not, that would be a name conflict.

  • Don’t worry about it Jonas. It is a British joke. Both AJAX and Flash are floor cleaners in the UK and VIM is another brand which is why he was suggesting it.

  • Jonas Geiregat

    Héhé I get it. AJAX is also a Dutch football team.
    VIM made me think of calling it WIM (Web Improved).

  • Hi Guys
    I think this site sums it all up nicely:
    ..if only the name “Cilit Bang” was still available!
    Simon (in the big city!)

  • Brandon

    I think it’s great that we are seeing new ways to use the internet. It only shows growth in an industry that has been slowly climbing. Is it about to boom again, or is it another bubble? We are designers/developers. A lot of us aren’t business planners. We can create cool applications, but how do we make ligitimate money off our work without slapping some Adsense on it and then praying for a million visitors a month? I myself find digg.com to be a great application and site. I enjoy it, but yes, how is it going to make money? Nobody will pay money to show others cool news stories. Yet at the same time, designers don’t want to litter their page with advertisments. If you look at yahoo and google, they started the same way, as projects. Yet, how do sites make money. Just like any business, with customers or users. So we need to figure out how to attract and keep users. If digg is going to be our Tech news source, then it needs to know it userbase and try to grow itself around that… but once again, how? That’s the question.