Is it important to ask a web (2.0) site owner, “What’s your business model?”

We know, time will tell, and a method will evolve, later, rather than sooner!

When any new product (read “social networking or, web 2.0 website”) is ‘soft-launched’, it’s very fashionable for tech trend followers to question right away, “So, what’s their business model?”. These people soon try to determine whether they’re the next ‘Google’ (or Bill Gates) around the block; are immediately curious about how the two-week-old site is going to be “monetized” and be profitable; or how the bunch of kids conceiving this site while fooling around in their ‘garage’, will now leapfrog directly from “Pop & Mom paying for their Tall Starbucks Lattes” to becoming “Grande millionaires in any Californian city”!

I have often wondered whether the timing of such a question is appropriate. On the one hand, these people are deemed as ‘kids’, who were ‘just pottering around in their basement’. What, and how much should we expect them to know about business models especially given that they are the tech types, probably just out of school or killing time before they head to MIT, Caltech, Harvard or Stanford (not to Wharton, please note). Furthermore, will it not be a long time before their site actually has enough ‘measurable stats’ on traffic to determine the success or failure of their site. Why is there a pressure-of-sorts right away to make money, even before these guys have found their feet? (Even in a brick-and-mortar operation the ROI expectations are rarely immediate, despite a relatively better knowledge of business and market environment and clear product, revenue, sales, cost of production, overheads & profits and a clear business plan.) Besides, for every ‘breakthrough’, ‘killer application’, or ‘new concept’, there are (or will be) at least a dozen copycats. After all, that not being difficult, next item to worry about is how does one build one’s user base? The quickest way to acquire new users is to allow them free login at the end of a simple, two-minute, three-step registration process. (To begin, get on to the affiliate marketing bandwagon.) These sites are geared towards teens, tweens, young adults or singles seeking mates, hence WOMM (i.e. word-of-mouth marketing, or any form of referral or viral marketing) is the fastest method of bringing in new users – that is sooooo obvious.

With new websites (along with each one’s alpha, beta versions) brought to the WWW every day, it’s rather difficult to keep track of all the sites. Unless, these whiz kids find angel investors and venture capitalists to fund them at least for the first few years, visibility of these sites certainly diminishes over time. Out of sight, out of mind… Likewise, it follows, as a user you better be on the same site as your buddy, or else, out of site, you’re out of their minds (and out of the social scene, buddy)! But, how many sites can you be active on, how many sites will you register on? Which sites will be around for a long time, or then of course, why even bother about brand loyalty? (Who pauses to dwell on these issues, anyway!) The target groups have short attention spans, fewer loyalties (at least perhaps in these matters, without me sounding presumptuous), so they’re bound to go hopping around on whichever site holds their fancy at least for a while. Of the hundreds of Web 2.0 sites that have been launched, why is it that one hears only about a handful… Facebook, mySpace, youTube, LinkedIn, Flickr, Shutterbug and some others? Until such time that the investor funding lasts, they’ll keep advertising hence the high visibility. Besides, the frenzy of new registrants (active or otherwise) appears good on the books. The stats look good too. Well, they’re the sort who devise the mathematical models to track user stats as well, right. But somewhere along the line, they also have to “monetize”, right, and make it a profitable business model. Once they’ve been around for 4-5 years, their funding either has dried up, or now, the investors want to see the profits roll in. Well, do the users care whether or not you – the site developer, founder, management or owner – makes money? Of course not, they’re not on your site to click on the ads that are going to bring you revenues. They are smart, remember, and they’re not loyal. They’re inundated with advertising through all their gadgetry. They have this great knack of ignoring what they don’t wish to see or hear. Remember, you and I were in our teens, tweens and are now young adults. Should we pause for a moment to think about this?

Top 1000 List – Everything Web2.0

How many of us have heard of them all, leave alone signed up on 100s of them?

What do you think is the business model for each one of the 1000 and at least a 1000 others like them?

And today, we read about this


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s