081017 - web centric business model

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THE WEB & BUSINESS

DIGITAL

Waggener Edstrom Worldwide |Ged Carroll |November 17, 2008

2THE WEB & BUSINESS:

• A little bit of scene setting

• Web 1.0

– New economy

– Transactional web

– Knowledge economy

• Web 2.0

• Forces of disruption

• Challenges

3BUSINESS

The etymology of "business" relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. The term "business" has at least three usages, depending on the scope•A particular company or corporation•The generalised usage to refer to a particular market sector, such as "the music business" and compound forms such as agribusiness•The broadest meaning to include all activity by the community of suppliers of goods and services. However, the exact definition of business, like much else in the philosophy of business, is a matter of debate

4A LITTLE BIT OF SCENE SETTING: CONFLICT

The internet and counterculture

Homebrew computing

Hippie culture

• Stewart Brand

Libertarianism

Open Source

Social web

MAKE culture

The internet and ‘The Man’

ARPAnet

Commercialisation of the web

• Technology bubble

• Telecoms bubble

• IT bubble

• Dot.coms

• Google age


WEB 1.0

6THE NEW ECONOMY

• Network effect• Perfect price economy • Arbitrage• The long tail or global niches as it was called then• Adhocracy• Changing nature of free

7TRANSACTIONAL WEB

Businesses went online because they saw a vast untapped marketplace−Brochureware – replication of printed literature in pixels−A canonical "dot-com" company's business model relied on harnessing network effects by operating at a sustained net loss to build market share (or mind share)−What’s technically possible and hang the user experience−Reduce the costs of processes

− Circumvent size, reputation and entrenched brands

− Circumvent government regulation

− Click through advertising− Extremely measurable and trackable− Traditional direct response marketing

moved online− Brand-building is a struggle

− Cheaper ongoing costs of distribution in electronic publishing

− Paid subscriptions− Online marketplaces

8HIGH CASUALTY RATE

Businesses went disappeared because:−There wasn’t sufficient demand for the products or services offered−They burnt through cash base before making a profit−People only use online services if there is a benefit (its easier to order pizzas by phone than by WAP)−New build business processes didn’t work

− Couldn’t compete head-to-head with established brands

− Regulation caught up with businesses

− Online advertising dropped 27% post-bubble

− Restrictions on payment systems (merchant status and transaction costs)

− Technology did not match expectations

9KNOWLEDGE ECONOMY

Concept popularised by Peter Drucker through his book The Age of Discontinuity•Global village•Collective intelligence / hive mind•Business clusters around areas of expertise•Hard to regulate, restrict or tax•Locked into systems and processes higher business value than when between an employees ears


WEB 2.0

11WHAT IS WEB 2.0?

O’Reilly Publishing

12WEB AS A PLATFORM

Social networks• Widgets• Applications

XMLAPIsPublishing platforms• Blogger• Letseat.at

On Demand Computing• Amazon EC3• MediaTemple

SaaS• Salesforce.com• Google OfficeClick and build tools• DoodleKit• Dottemplate• Iompi

Crowdsourcing / Prosumption• Get Satisfaction• Wikis• Amazon Mechanical Turk


WEB OF NO WEB

15WEB OF NO WEB

• Web and offline world no longer distinct• Offline advertisements usually:

– List a website– Show you what to type in the search box

• Interacting with online content in the real-world, succeeding where virtual reality failed– QR Codes– Twitter– Nintendo Wii controller– Apple iPhone

• Every transaction requiring research goes online now: Google as reputation engine

Charlene Li described the future of social networks as ‘being like air’

16WHERE 2.0

Mashing up web technology with location information

– Google Earth– Flickr maps– Nokia maps– Fireeagle– Dopplr

Being able to reach the customer at the right time, the right place with the right information

– Advertising moves from being selling to useful information

– Requires balance– Utility for customer– Reward for their attention– Privacy respected

17WHERE 2.0 CONT’D

Minority report is close to real-life: it just doesn’t look as sexy−Parcel tracking−Mobile phone tour guides−Location-based special offers−Pay per mile car insurance−Congestion charging−Location-based social networking−Location-based shopping and bar / restaurant recommendations


FORCES OF DISRUPTION

19FORCES OF DISRUPTION

Culture / politics clash• Information must be free• Open source and creative commons

movement

Technology moves faster than business models

• Music and film industry

Crowdsourcing• Amazon’s Mechanical Turk service• Carnegie Mellon ESP game

Rapid development• Web as a platform and OSS reduces

development costs and times considerably

• Start-up on a credit card - Trumours

Margins in the long tail• Most music masters won’t be

remastered for online distribution

Self-publishing costs falls dramatically

• Blogging versus specialist media• Self-published pornography versus

the adult entertainment industry• Flickr versus stock photography• Scoopt• Consumer newsgathering• Badvocacy


BIBLIOGRAPHY

21BIBLIOGRAPHY

• Encyclopedia of the New Economy – Wired Magazine• From Counterculture to Cyberculture: Stewart Brand, the Whole Earth Net

work, and the Rise of Digital Utopianism by Fred Turner

• Marketing to the Social Web: How Digital Customer Communities Build Your Business by Larry Weber

• Now or Never : How Companies Must Change Today to Win The Battle for Internet Customers by Mary Modahl

• The Groundswell by Charlene Li and Josh Bernoff • Free Culture: The nature and future of creativity by Lawrence Lessig• cultures@siliconvalley by J. A. English-Lueck• What is web 2.0? By Tim O’Reilly• The Age of Discontinuity by Peter Drucker

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