A little behind but back with a lot of stuff !!

Due to some work on my roof last week, I didn’t have much time to follow up my blogs. I wish I had but as it was a hell of a job, I didn’t. So here’s some very interesting stuff from the Dion Hinchcliffe’s Web 2.0 Blog. He always has interesting viewd on things. In brief:

  • The Essentials of Leveraging Web 2.0
    What should be your strategy when creating open websites & platforms?
  • Strategies for Making the Most from web 2.0
    How do you market your product in the folksonomy?
  • Revenue Implications for Web 2.0 Principles
    The up and downsides of 7 principles (which are not meant to be exhaustive) 🙂
  • Seven Ways to Explicity Trigger Network Effects
    How do you trigger a network effect?

The Essentials of Leveraging Web 2.0

  • Ease of Use is the most important feature of any Web site, Web application, or program.
  • Open up your data as much possible. There is no future in hoarding data, only controlling it.
  • Aggressively add feedback loops to everything. Pull out the loops that don’t seem to matter and emphasize the ones that give results.
  • Continuous release cycles. The bigger the release, the more unwieldy it becomes (more dependencies, more planning, more disruption.) Organic growth is the most powerful, adaptive, and resilient.
  • Make your users part of your software. They are your most valuable source of content, feedback, and passion. Start understanding social architecture. Give up non-essential control. Or your users will likely go elsewhere.
  • Turn your applications into platforms. An application usually has a single predetermined use while a platform is designed to be the foundation of something much bigger. Instead of getting a single type of use from your software and data, you might get hundreds or even thousands of additional uses.
  • Don’t create social communities just to have them. They aren’t a checklist item. But do empower inspired users to create them.

Strategies for Creating Open Web Sites and PlatformsAs culled from Web 2.0 Summit discussions and other known best practices…

  1. Liberate content and services via a public, open API. Content will continue to be separated from the experiences that mediate access to it, this makes adaptable experiences possible. Example: RSS readers let users consume content in the ways they choose and have control over. Doing this turns your Web application into a platform and is one of the most important habits of highly effective Web sites .
  2. Syndicate as well as use Web services to open up data. Each method has clear strengths such as discoverability, ease of consumption, or on-demand control. Example: This means RSS or Atom as well as REST or SOAP.
  3. Make it legal to reuse content. Don’t charge if you can help it, consider monetizing it via advertising, transaction fees, or subscriptions. Don’t cripple unintended uses, such as Yahoo!’s limits on their APIs, vs. Amazon’s profitable emphasis on unlimited use.
  4. Diligently build trust and credibility. No one will use your open data or services unless there is trust and credibility in the site. This is very hard to establish and is easily lost. This is one of the hardest intangibles of openness to manage.
  5. Expect the unexpected. Opening up a site means that others will dream of ways of using your data and services in ways you couldn’t imagine. Often this means they’ll use it as a free resource to achieve something that wasn’t possible before in terms of scale or volume. Be prepared for extreme situations and be sure to monitor your feeds and open services and be prepared to throttle them for mailicous or inadvertant waste.

Strategies for Making the Most from Web 2.0

There are direct (the 3 items above) and numerous indirect ways to monetize Web 2.0 that often go unappreciated

Some of the indirect ways which lead to revenue growth, user growth, and increased resistance to competition — which in turn lead to increased subscriptions, advertising, and commission revenue — are:

  • Strategic Acquisition: Identifying and acquiring Web 2.0 companies on the exponential growth curve before the rest of the market realizes what it’s worth (early exploitation of someone else’s network effects.)
  • Maintaining control of hard to recreate data sources. This is basically turning walled gardens into fenced gardens: Let users access everything, but not let them keep it, such as Google providing access to their search index only over the Web.
  • Building Attention Trust – By being patently fair with customer data and leveraging user’s loyalty, you can get them to share more information about themselves that in turns leads to much better products and services tailored to them.
  • Turning Applications into Platforms: One single use of an application is simply a waste of software. Turn applications into platforms and get 5, 50, or 5,000 additional uses (Amazon has over 50,000 users of its line of business APIs) for example. Online platforms are actually very easy to monetize but having compelling content or services first is a prerequisite.
  • Fully Automated Online Customer Self-Service: Let users get what they want, when they want it, without help. Seems easy but almost all companies have people in the loop to manage the edge-cases. Unfortunately, edge cases represent the The Long Tail of customer service. This is hard but in the end provides goods and services with much tighter feedback loops. And it’s also a mandatory prerequisite for cost effectively serving mass micromarkets. In other words, you can’t directly monetize The Long Tail without this.

Lying directly in the primary tenets of Web 2.0 however, are a series of two-edged issues from a revenue perspective. Though the concepts and ideas are powerful when applied appropriately, they can also pose significant short-term and long-term challenges. Below are the basic principles of Web 2.0 along with the positive and negative revenue implications for most companies on the Web today, even ones that aren’t fully embracing it yet.

Revenue Implications for Web 2.0 Principles (not meant to be exhaustive)

  • Principle 1: Web as Platform
    • Upside: Revenue scalability (1 billion users on the Web), rapid growth potential and reach through exploitation of network effects
    • Downside: Competition is only a URL away, often requiring significant investment in differentiation
  • Principle 2: Software Above a Single Device
    • Upside: More opportunities to deliver products and services to users in more situations
    • Downside: Upfront costs, more infrastructure, more development/testing/support (costs) to deliver products across multiple devices
  • Principle 3: Data is the Next “Intel Inside”
    • Upside: Customer loyalty and even lock-in
    • Downside: Lack of competitive pressure leading to complacency, long-term potential antitrust issues
  • Principle 4: Lightweight Programming & Business Models
  • Principle 5: Rich User Experiences
    • Upside: More productive and satisfied users, competitive advantage
    • Downside: Higher cost of development, potentially lower new user discoverability and adoption
  • Principle 6: Harnessing Collective Intelligence
    • Upside: Much lower costs of production, higher rate of innovation, dramatically larger overall content output
    • Downside: Lower level of direct control, governance issues (increased dependence on user base), content management issues, and legal exposure over IP
  • Principle 7: Leveraging The Long Tail
    • Upside: Cost-effectively reach thousands of small, previously unprofitable market segments resulting in overall customer growth
    • Downside: Upfront investment costs can be very significant, managing costs of customer service long-term

Seven Ways to Explicitly Trigger Network Effects

  • Network Enable Your Application. This might seem obvious but it’s a critical prerequisite and has more than the surface potential for creating interesting new applications outside of pure Web plays. For example, a Web 2.0 application does NOT have to be Web-based, but should be able to at least connect to the Internet. iTunes is an excellent example of Web 2.0 outside of the browser, but even mobile phones and text messages, made better ala TWTTR, shows the potential to think outside the box when it comes to thinking about a network.
  • Enable Data Sharing and Data Defaults. A big part of harnessing collective intelligence via Web 2.0 techniques is by making the experiences of tertiary users in a given situation easier and smarter. By this I mean when a user does something using the Web 2.0 application, that information should contextually improve that situation for the next user that comes along. I often cite del.icio.us/popular as a great example of leveraging the work that the Web users that came immediately before you are making your upcoming experience that much better (less searching for new and relevant content.) More specifically this could mean expert guidance in completing online forms, improving shopping recommendations, collaborative spam filtering, and much more. Capturing information from your users and making it available to others (without violating privacy of course) is a key “plank” of Web 2.0.
  • Linkify Everything In Your Web 2.0 App. And I mean everything. The hyperlink is one of the most powerful mechanisms existing for triggering network effects. It’s how users show up to your site in the first place and everything else thereafter. A hyperlink structure must be how the information on your site is organized, shared, bookmarked, e-mail, IM’d, etc. Granular URLs are the key here. A site should have a URL structure that has clear axes for its URL segments (the things between the slashes in a link) to navigate through a user’s information, the shared folksonomy etc. Something like site/user/tags/xxxx is a classic example but there should be many interesting (and user-defined) paths to get to the same information. Once available via links, the knowledge of the page, data, or minicommunity to which the link navigates can propagate with amazing — even alarming — speed. And propagation over the network is the name of the game when it comes to network effects. If that link contains something people want to share, they will e-mail the link to a group of friends, who will IM it to more friends, who will put the links in their blogs, and so on. Pretty soon everyone is involved and you’re buying bandwidth upgrades in bulk quantities. The Message: Consistently think in and design in hyperlinks.
  • Syndicate Your Content: It’s unclear in my mind how powerful this truly is, but the blogosphere is proof that it can be quite potent. Furthermore, it greatly increases the discoverability of whatever content is on your site. You should support RSS at least, but probably Atom as well. Other people have written more authoritatively about this than I do here but it’s an important checklist item.
  • Turn Your Application Into a Platform: Encouraging unintended uses by others is practically de rigueur now and every good Web 2.0 site seems to have an open Web API these days. But what’s important it in this context is that it leverages network effects on an entirely new meta level. Not only is your site using its own traffic to generate more traffic and create more connections on the network/between people, but so are tens or even hundreds of other sites. They can use your API to add your site’s content and functionality to theirs (and hence their feedback ecosystem to yours). And they might leverage network effects a whole lot better than you for a variety of reasons (better design, more funding, cooler crowd, what have you.) Warning: Make sure your APIs are designed to leverage your social architecture or you might not get the desired result, just parasitic use.
  • Open Up Inside Your Site: Like MySpace allowed for a while with YouTube, let others host content, Javascript badges, widgets, feeds, or what-have-you on your site in the areas that belong to your users. Not only does this have the useful side effect of instilling a sense of creation and ownership in your users, but it allows you to leverage the network effects of other sites. This makes the content on your site aggregate the best content of other sites creating second order effects that can make your site cumulatively more valuable by building synergy, a new-agey but accurate term that means that the sum is greater than the parts.
  • Build a Viral Social Architecture. Sounds fancy and difficult but it’s mostly not. At its most basic, you just make sure that it’s extremely easy for users to invite their friends, family, and colleagues to visit the site. Example: The end of each YouTube video lets you share it with others via e-mail. There’s a lot more to this however and I intend to write it about it soon, but just remember that building good social architectures of participation is one of the core techniques for those interested in serious results.

Source: Dion Hinchcliffe’s Web 2.0 Blog

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