Tuesday, May 27, 2008

Web 2.0: Features, Not Business Models?

Lots of valuable features do not provide a foundation for fleshed-out business model, many Web 2.0 entrpreneurs seem to be finding.

The shortage of revenue among social networks, blogs and other “social media” sites that put user-generated content and communications at their core has persisted despite more than four years of experimentation aimed at turning such sites into money-makers, the Financial Times reports.

“There is going to be a shake-out here in the next year or two” as many Web 2.0 companies disappear, says Roger Lee, a partner at Battery Ventures. That's just part of the innovation process, as you know if you were part of the Web 1.0 boom of the late-1990s.

But features often are an important and long-lasting effect, even when completely new business models are not built. Email arguably hasn't created a stand-alone business model, for the most part, yet it has radically changed user behavior and expectations.

Social networking appears to be one of the lasting fruits of the current Web 2.0 wave, no matter what happens with most of the companies attempting to make a business out of it.

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