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Web 2.0 can and will be commoditized
Many information business models rely on network effects derived from their exclusive access to social networks. Standardized xhtml microformats for sharing social data level the playing field for smaller players by making it possible for them to pool their data. These pooled data can provide the same positive network effects as the exclusive networks possessed by larger players.
Sections: Business Emerging Practice
Topics: folksonomy microformats FOSS
Peter Merholz makes an interesting observation regarding what many are starting to call Web 2.0:
On a sales call with a potential client, I tried to impress upon her the need to fundamentally reconsider how her company approaches what they do, and I used the analogy of Snapfish/Ofoto/Shutterfly and Flickr. The former were stuck in pre-Web, pre-networked-world ways of thinking about people, things, and relationships. The latter is built, ground-up, *of* the Web, and recognizes that the “value-add” (as business types like to call) lies not in the production of things (which inevitably get commoditized and provide negligible margins), but in the provision of services that provide an experience you simply can't get anywhere else.
peterme.com: Death Throes of a Business Model
I've been giving this topic a lot of thought lately as I have moved forward with developing and trying to sell business owners on the xFolk xhtml microformat, a format designed specifically to commoditize large aspects of the types of services Peter is describing.
In the last year, many centralized services have sprung up to facilitate tagging bookmarks and other web artifacts, for instance flickr, del.icio.us, and most recently feedster. These services have the following characteristics:
- They focus on the value to the individual user. With the best of these services, it easy and even fun to tag and share items. Further, tagging is sufficiently compelling at the individual level to motivate people to do it.
- They provide further value by aggregating tagging and annotation across users. In all of these services, users can see how others are tagging items they are viewing, an aggregation of all of the tags available, and items classified by tag. All of these activities become more valuable the larger the network or group of people participating, leading to a positive network effect.
- Their most obvious potential business model is based on exclusive access to the network. It is not so much that the services lock in individual user data but that you must go to them for the aggregation. For instance, it is very easy to export data from del.icio.us. However, only by using del.icio.us do you gain access to the aggregate of del.icio.us users.
Recently, a number of standalone, open source competitors such as scuttle and de.lirio.us have arrived on the scene. These competitors approach del.icio.us in ease of use but are far from it in terms of users. As standalone bookmark publishing systems, they will never be able to offer the aggregate views of the existing players because they lack the users.
In order to complete the value proposition centralized services offer to users, standalone players need some sort of aggregator to help them combine forces. A well-accepted, standard format that makes the smaller players' data easy to aggregate will facilitate the emergence of aggregators. xFolk is meant to provide just this format.
Once a microformat like xFolk has been adopted, smaller players will still be very much able to compete with the likes of del.icio.us and flickr on user experience. Other players will emerge to compete with the current leaders on tag aggregation, much like technorati has already started to do at a very small scale. Folksonomy publishers and consumers will win because they have more choice of outlet. Players currently enjoying an advantage based on trying to maintain exclusive access to user networks will see that advantage erode.
Bud posted this on June 1, 2005
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Tracked on June 5, 2005 08:21 PM
Comments
It's an interesting argument in theory, but I must admit I'm struggling to see how it'll work in practical terms. As with all open formats, they need to be accepted and adopted up by big vendors in order to be successful.
Posted by: Richard MacManus at June 2, 2005 11:48 PM
I'll admit the argument is largely conceptual right now, but the microformat is there. And, we are moving toward some implementations at least at the producer level.
I guess my cut is that it pays to make your information as available as possible. Publishing link blogs in a standard way should make you that much more visible.
Posted by: Bud Gibson at June 3, 2005 12:06 AM
great insights! this topic has been on my brain a lot recently. we need to spread this gospel as it's inevitable but will help all companies we know to get there first.
Posted by: mark pincus at June 3, 2005 11:43 AM
I really like where you are going with this and agree. Locking on to the user and data is the big fallacy of web2.0. They spawn competitors... like us (de.lirio.us) who refuse to play that game.
Mind you, only geeks care. Flickr users are spanning largely into the non-geek market now.
I'm compelled to think that only geeks care about this type of thing. We're planning to take de.lirio.us into the larger world of non-geeks
and if we made the data open I doubt any of them would care. Being a geek I bang my head at the reality, but it's true. Is there any reason, other than moral, for tagging data to be open?
I wrote the datalibre mission based on the blogging genre where data goes upstream from the user to the world. Here it is a pain in the ass
(the reason) to rewrite anywhere else (like amazon reviews) when you've done it once on your blog.
We're working on distributing an easy to deploy version of delirious so people can have their own just like a blogging client (with a format built in!), but I wonder if people see the same utility in it.
We'll see.
Steve Mallett - http://de.lirio.us
Posted by: Steve Mallett at June 4, 2005 09:49 AM
Steve Mallett, I understand where you are coming from. When using the tool, users care about the user experience. As a folksonomy front-end, you should focus on that.
But, as a folksonomy publisher, you should also focus on getting your stuff as widely publicized as possible. Let me note that if search engines pick up on your tags, they still link back to your repository, providing you visibility. Implementing xFolk 0.4 is so low cost (15 minutes of your time, even at $400/hour is only $100) and search visibility so sought after that you should just do it.
Coming back to your idea about business models, I think it is really the aggregators (likely search engines) that have a shot at monetizing this in the same way they have monetized their role as web indexes in general. However, I think that higher web visibility via search engines also increases your traffic, stickiness, and hence ability to turn a buck.
Posted by: Bud Gibson at June 4, 2005 12:51 PM
Ok, I think we're still on the same page, but on different paragraphs.
See, I think any search engine can get the taxonomy from URLs. For instance: http://de.lirio.us/rubric/entries/tags/kayaking (a bit bloated still, i know) Here's another, but from a blog entry: http://www.jluster.org/tag/social/tagging/ I'm switching to wordpress shortly just so I can do this too.
So.. really that is all out there now. Hit a tag follow the rss and you've got all the info you'd ever want.
When I'm thinking about open data I'm really in a world where I tag info about a book I link to on amazon, write up, and amazon -or- barnes & nobles -or- local book store can use on their website as well. Many receivers of data produced once without duplicate effort.
In short I'm with you and can implement xFolk in a jiffy. Frankly I feel that xFolk, and any other formats change, but URLs like at any bookmarking site are not as bound to change. The URLs themseleves might change, but URIs formats are pretty well standardized for long periods of time.
Food for thought: I really believe that without a motivation to do the work people won't. People, bloggers, normal everyday people aren't going to write all these formats for different uses into their applications and/or writings. In the end I really believe it is too much work vs fun & utility. These things have to be built with personal motivations in mind or they'll never take off.
Again, I'm with you. The idea is great. I wonder at the implementation.
Posted by: Steve Mallett at June 4, 2005 05:41 PM
Steve, OK, I see what is going on here:
"Food for thought: I really believe that without a motivation to do the work people won't. People, bloggers, normal everyday people aren't going to write all these formats for different uses into their applications and/or writings. In the end I really believe it is too much work vs fun & utility. These things have to be built with personal motivations in mind or they'll never take off."
Here's how I see this playing: I get tool providers like you to incorporate it in their publication and export formats. That removes it from the end user, as I suggest here:
http://thecommunityengine.com/home/archives/2005/06/an_xfolk_04_imp.html
where I say:
"Since xFolk is a back-end technology (i.e., a way of transmitting data for machine aggregation), I am working to get it produced as the output of already existing front-ends like blogmarks, scuttle, de.lirio.us, and even del.icio.us."
Another commenter makes a similar remark here:
http://www.solitude.dk/archives/20050605-0348/
where he says:
"For a straight-up, decentralized del.icio.us style tagging see xFolk. It's a XHTML microformat, and it's just been released in version 0.4. It looks very promising, I'd certainly like to see services like del.icio.us take advantage of the format as an export/import format at least."
If you look at blogmarks, del.icio.us, and jots, they all provide "post to your blog" features. It's there where I see xFolk playing a role.
There is also some possibility of a wordpress plug-in, but mainly I think it needs to "just come" in the export and publication format from services.
So, we may agree completely, or at least be on adjacent paragraphs.
Thanks again for the implementation.
Bud
Posted by: Bud Gibson at June 4, 2005 11:12 PM
i agree that web2.0 is doing for open and aggregating.but it scares of real modal which can be ease of using for non-geeks.
Posted by: walaqi at June 6, 2005 12:23 PM