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.

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Bud posted this on June 1, 2005 | Permalink | Comments (8) | TrackBack (1)