Sunday, March 4, 2007

More On Revenue Generation

Additional information regarding Web 2.0 Revenue Generation to go along with the post below. (I wanted to add this as a comment but could not seem to embed a graphic into the comments section...)

Three Direct Ways to Generate Revenue from Web 2.0:

1) Advertising
2) Subscriptions
3) Commissions

Indirect Means of Generating Revenue from Web 2.0:

  • 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.

Source: Web 2.0 Blog

1 comment:

N. Venkatraman said...

great summary. Thanks Jeff. can anyone think of additional approaches or different ways of monetizing the connections underlying Web 2.0?