Profit and Loss in the Web 2 0 world

FREE IFN Newsletter

Profit And Loss In The Web 2.0 World

By: Dan Morrill
2007-03-14

Companies, bloggers, and other identities or groups on the internet are redefining what community actually means.

Each community, small or large is building out like sets of data (for example people who subscribe to blogs at It toolbox, or Live Journal, or Blogger) and then adding the ability to syndicate via RSS those viewpoints.

We make assumptions about our readership, and we make assumptions about how they will use the data that we generate. I wrote a series of articles on using MSN or Live search in the same way that you would use Google to discover vulnerabilities in web server and application systems. Google hacking is well known, what is not well known is MSN and even Yahoo Hacking. These articles generate interesting messages from folks like "I lost my MSN account can you hack into it for me".

The assumption about the readership with the MSN hacking series was to use the MSN or Live search engine like you would the Google search engine to discover vulnerabilities in systems. The readership has taken it as something else. How do you target advertising for this within the confines of the primary publishing point. And then how do the syndicates who use this data also turn around and make advertising decisions around the same content.

Then there is the issue of compensation for secondary publishing, I keep an on line repository of all the things I write about, not just the stuff on IT Toolbox, but other interesting points that do not fit into the greater confines of what I have limited myself to at IT Toolbox, both are syndicated.

Youtube, and others (Ref Viacom in 1 billion dollar lawsuit with Youtube) issues are exactly how can Viacom make money off of the secondary distribution of their content. The syndicates make money off the work that I have syndicated, but I don't see a dime. Viacom makes money off of their current networks, but in a similar situation, fails to make money off of the secondary internet based distribution.

Web 2.0 is based on the predication of user generated content being uploaded and shared (much like the peer networks). I upload my stuff (that I own technically the copyright to), and in standard Web 2.0 business, it's all over the place very quickly. Like other writers, like other producers, and other content developers, it's that lack of secondary income off secondary distribution that becomes the bigger issue in the longer run. We know we are loosing something, but outside of money, we are not sure what it really is.

Nor do we really know how to target advertising or other revenue generation streams into the secondary syndicated or upload market, because the data files can be edited at will to take out any embedded advertising that we might put into the system. If you have watched battle star galactica on TVLinks, there are no ads, there is no way for anyone to make money off this secondary distribution authorized or not.

The Sci-Fi channel has no idea then how many people are watching Battle Star Galactica off the secondary channels. The ads have been stripped; there are no metrics available outside of what the Sci-Fi channel can find out publicly by looking at the stats provided by TVLinks. What is the viewership, how do we define the metrics for success, and the ever present idea of how do we then redefine our audience in Web 2.0?

There are hundreds of little YouTubes, or little TVLinks out there. The audience metrics, the syndication metrics, the readership or viewership are going to remain unknown or have a high level of inaccuracy. Defining the people coming to the site is impossible unless there is more data sharing between the hundreds of smaller sites carrying other peoples content.

Targeting advertising, embedding advertising, or otherwise trying to make money off the secondary content is near impossible because we can not really define the readership of those secondary outlets. The metrics do not exist for the content producer. While the idea of revenue sharing has been floating around, how do you define the amount of revenue to share? It is unlikely that a small web site is going to be able to afford the licensing for content that can come from hundreds of different RSS Feeds. There are serious doubts that even YouTube can afford to do the same thing. Companies should show a profit (and that is where web 2.0 is getting interesting, how much profit off of other people's content is enough?) and do things to stay alive. The Web 2.0 economic model has not been developed enough to the point yet to make this process happen.

The inability to define a viable economic model was one of the reasons that Web 1.0 imploded, and Web 2.0 is tracking along the same course. If there is no way to reimburse the content producers, if advertising does not pay enough for profit sharing, if there is no way to define a target audience and attract viewership, web 2.0 might be headed towards the same issues that web 1.0 is heading to. Lots of great stuff, many small sites with a couple of huge 800 pound gorillas in the room, and no way to accurately track, trace or pay content developers or contributors. Communities get fractured and grow ever more eclectic in the longer run until no single community has a "profit" nor enough contributors to make web sites grow.

Comments

Tag: Profit, Web 2.0

Add to

Del.icio.us |

Digg |

Furl

View All Articles by Dan Morrill

About the Author:
Dan Morrill has been in the information security field for 18 years, both civilian and military, and is currently working on his Doctor of Management. Dan shares his insights on the important security issues of today through his blog, Managing Intellectual Property & IT Security, and is an active participant in the ITtoolbox blogging community.


Dow	13675.25	-0.98	(-0.01%)
Nasdaq	2774.76	-24.50	(-0.88%)
S&P 500	1515.88	0.00	(0.00%)


Titan Quest Forum	Nintendo Wii	Graphics Forum
Halo 3 Forum	Mac Software