The Facebook business model is the root cause of a lack of transparency

Mark Zuckerberg just announced that Facebook will revert back to the old terms of service as too many people complained about the new ones. I think it is a honorable that Facebook is retracting a pretty bad plan. It is also good to see that they are now engaging with their community about where to take this. In the post Mark states:

Going forward, we’ve decided to take a new approach towards developing our terms. We concluded that returning to our previous terms was the right thing for now. As I said yesterday, we think that a lot of the language in our terms is overly formal and protective so we don’t plan to leave it there for long.

More than 175 million people use Facebook. If it were a country, it would be the sixth most populated country in the world. Our terms aren’t just a document that protect our rights; it’s the governing document for how the service is used by everyone across the world. Given its importance, we need to make sure the terms reflect the principles and values of the people using the service.

Our next version will be a substantial revision from where we are now. It will reflect the principles I described yesterday around how people share and control their information, and it will be written clearly in language everyone can understand. Since this will be the governing document that we’ll all live by, Facebook users will have a lot of input in crafting these terms.

It’s a difficult thing to get right. Facebook has obligations to shareholders, advertisers, business partners, 3rd party application developers, the employees of the company, and yes, the user too. What makes the task even more daunting is that the Facebook business model (free, advertised based) forces them to leverage the size of the network, instead of monetizing on individual user value. It puts them in a balancing act where the advertisement capabilities need to outweigh the individual user rights in order to keep a decent revenue stream. In other words, the more freedom Faceook has to use the data coming from user profiles and interactions, the more capabilities they have to create revenues.

Why do people sign up for Facebook? I suspect in most cases to have a good time and connect with friends. They do not want or need advertisement. It’s a distraction from the core value they wish to receive from Facebook. At the same time, you can’t provide 175M people a free service without some way of creating revenues (although it remains to be seen if advertisement is going to create enough revenues). The problem is that most people are not aware of this and Facebook is not providing the transparency to make sure people are taking a conscious decision when they sign up for the service.

If anything, it is this lack of transparency that should be solved first. The TOS is only one aspect of that. When you sign up for Facebook it should be clear how the service is making money. It should be clear that when you start adding friends, interact, upload content, etc. that all these actions are monitored and stored. It should be clear that even when you are setting privacy controls to a high level it only affects other users, but that it doesn’t protect you or your interactions from Facebook. It should also be clear what Facebook does with 3rd party developers, advertisers and other companies that use the Facebook ecology to create businesses or revenues themselves. And when all of that is clear, then a user can take a conscious decision whether all of that is ok or not.

That is the dillema Mark faces. How are you going to educate 175M people about your business model and all its effects? A User-Centric or User Driven business model would force you to do the right thing for the user, and as a result of this you create revenues. Facebook is forced to do the right thing for the company in order to protect its revenue streams. And that is a big difference.

Just because Google can track your friends doesn’t make it valuable

I have an interest in new technology. I can get fascinated by the things it can bring us. I get even more enthusiastic when technology can be applied in daily life to improve things. At the same time I’m not a big fan of technology being pushed without intent. We need people to develop without intent other than curiosity or a desire to break barriers. I just get more excited with First Use. The First Use of a new technology isn’t defined by the technology itself. It is defined by the user who may or may not decide to incorporate this technology in his daily life. Breaking up existing patterns to build new ones. First Use is the crucial test for any technology. It answers the following question:

Is a user willing to put in the effort to learn about this new technology and incorporate it in his current habits?

The answer in any case is that willingness is related to either solving a problem or creating another type of value for the user. If this isn’t obvious from the start, then the user is not committed to put in the effort of integrating this technology into his life. Note that this isn’t necessarily related to design or usability or complexity. It helps if your development scores well on those factors. Bottom line however is whether or not the user conceives enough value to put the effort into it.

Early adopters tend to make the mistake that since they adopt quickly the rest of the world will follow. This is an entirely wrong assumption. They confuse passion for technology with the value being delivered by the new technology. There are lots of technologies developments that I love but rarely if ever use. These technologies simply do not pass my First Use experience.  For that very reason I do not consider myself an early adopter. I am interested in technology, but I am more fascinated by its use.

Answering the First Use question is something developers rarely address. It is a hard and painful process that draws away energy from the development process itself. It might even lead to the insight that there isn’t any value to be discovered making the technological effort useless. Not knowing the answer to First Use does not make any development useless. But not addressing the question makes the effort of development less effective. Sometimes you just have to let your users define the value of your developments. It’s a tactic used often by companies like Google (since they have near unlimited resources and capabilities to just try things out).

I was thinking about that when I saw the announcement of Google Lattitude, reviewed here by the WSJ. The idea of location based services is quite old, but combining it with a social aspect has revived the technology and now we see many examples of such services pop up. Chris Messina wrote a good post on this very topic, what if location was available everywhere?

Technology wise Google Lattitude looks great. In terms of First Use there are many questions that remain to be answered. If we move past the coolness factor (”Wow, I can see where Joe hangs out”) it becomes more difficult to envision using this in your daily life. Early adaptors will tell you it’s cool because yo get to see where your friends hang out and meet up easily. It will help you to get great retail discounts when you pass a store and are willing to tell them you are hanging out there. It is great to be able to automatically inform anyone willing to listen on your social networks where you are right now.  And so on.

I may be wrong, but not one of these advantages will overcome the barriers the technology brings right now to ask me to change my habits. In other words, there is no compelling reason for me to start using it. No problem is solved or real value created. Does that mean the technology is useless? Hard to say. This is a typical example where the market will decide if the technology has use. We will need to have an ecology of services in which location is used as one of the default inputs. One thing is for sure. Real revenues need to back up developments like this. Let’s hope we will not enter yet another free advertisement based ecology here. Instead focus on real user value and get users to pay for that. It will do the technology and the user value a lot of good. Otherwise this technology is bound to become yet another advertisement trap.

Web 2.0 progress is held back by Web 1.0 business models

I’ve often wondered how web 2.0 is really different from web 1.0. Most seem to agree that web 2.0 was an evolution in which we went from portals and destination to data and interactions. Web 2.0 is about interaction, social media. Everyone connecting in one big network. Data is the currency. It’s all true and sounds great to me. But why do we then still have huge destination sites? Why is there still a battle over users, eyeballs and visitors? Why is Facebook essentially a vacuum service, sucking everything in, and letting nothing get out? Why does Techcrunch report Friendfeed has a million unique visitors? We mash data up, connect it everywhere, but still force people go somewhere to fetch it.

If you think about it, the sexiest services right now are nothing more than old fashioned destination sites with some conversation added to it. In terms of business models, nothing new there. Business wise it’s not web 2.0 but web 1.0++ in disguise. I believe that the main reason behind this is that, although technology wise we have innovated many aspects of the web and its services, our online business models haven’t evolved with this change.

Just to be sure, I’m not talking about the huge impact online business models had on offline business models (e.g. tradition print getting killed by online media). I’m talking about online business models that existed say 5-8 years ago, compared to the models used now. Essentially investors and web entrepreneurs seem to be web 1.0 thinkers. They think in terms of destinations, eyeballs, unique visitors, traffic, advertisement, CPC, CPM. All of these elements have been around in online business models for ages. Nothing new there.

As a result of this there is no fundamental revolution taking place, it is more of a logical evolution. A tiny step given the potential that is really out there. Don’t get me wrong. The way the web presents itself to us, and the endless possibilities for us to connect online, has changed our online experience considerably. The question remains though. What if business models would evolve with that technological and behavioral change? What if we would stop thinking in terms of advertisement display or cpm, and would focus on other value drivers? What if we would care less about keeping users sucked into a database, and set them free because you don’t need to hold on so tightly to make revenues? It is this ‘old school’ thinking that inhibits us from starting true revolutions. Technology wise we can revolutionize our experience on the web. Business wise we are held back and forced to take smaller steps.

One could argue it is because current web business models are perfect and need no change. But that seems  incorrect as many companies have problems creating sustainable revenues. My biggest concern however is that current (often advertised based) business models are in most cases network centric instead of user centric. By that I mean that the business model works when the network that is being exploited gets larger. As a result the company executing that business model is forced to think in network value. I prefer business models that focus on user value. It is the cleanest and simplest business model. It works out best for the user (as he gets most value), and the company (as they receive revenues based upon that user value).

But here is the catch. Since 99% of current business models are network based and most web investors and entrepreneurs are trained to think that way, we can’t easily make the switch to a user value business model. And because of that we are stuck in our own trap of web 1.0 business models and unable (yet) to unleash the full potential of our technological capabilities to create user value. We end up with more destination sites and customer lock in. Customer lock in fits really well, wouldn’t you agree?

There are counterexamples of companies that did make that switch (e.g. 37signals, smugmug) and generate sustainable revenues. But we need more leadership in this direction. We need investments that step away from current practice and take a more user-centric approach. It would set us all free and help us build a User-Centric web.

Why you would pay for a great web service

I read a good post over the weekend of one of my favorite bloggers, Kevin Kelley. The post is entitled “People want to pay”. Kevin has written a number of posts on the FREE business model and good alternatives for it and has argued before that it takes only 1000 fans to have a good living on the web. In this post Kevin refers to a survey in the UK where music lovers have indicated to want an unlimited download service of DRM-free music for a monthly fee.

Kevin provides us a few reasons why people do want to pay for web services:

Yes, everything will be free, but in my experience people want to pay. They really do! People, mobs of them, will grab stuff that is free. They will try stuff for free that they would never touch if they had to pay. They will always gravitate, on average, to the lowest price, and what is lower than free?But, but, if people have resources they prefer to pay the creators of products and services they like. Payment is

1) A way of connecting.
2) A sign of approval.
3) A vote.
4) It indicates an alligence with the maker.
5) It feels good to the payer, to support.

I have written a lot about the FREE business model. While I do understand it has many advantages for  the investor, advertiser, the entrepreneur and even the user , it also comes at a cost. Kevin Kelly and Chris Anderson (the king of the long tail) inspired me once to write a post “Would you be willing to pay for a web 2.0 service that provides value?”. The reactions were mixed. Most would pay and do so already, some won’t. But those that do used the arguments Kevin mentioned above often. I miss the value reason. People will pay if they are provided with value. It’s that simple.

Why does the FREE business model come at a cost? If poorly executed it leads to:

1. Destination sites and Walled Gardens
2. The network being more important than the user
3. Forced attention on advertisement
4. Customer lock-in instead of Customer freedom

The success of web 2.0 is the FREE business model, but it’s also it’s failure. Every social service seeks to be a new “Facebook” or “MySpace”. Every new web 2.0 service goes after world domination. In order to accomplish that the entrepreneur focuses on the great advantages of the FREE business model without taking into considerations its disadvantages (hence the poor execution). They go for the quick, free, penetrating distribution strategy, but then harass the user with things like advertisement or walls around the service. The numbers are quickly more important than the individual customer. How many downloads? Page Views? Traffic? Usage? Click through? Can we make it viral? There isn’t a single user value parameter in that. Advertisement holds web 2.0 is being held in a death grip.

But if you are willing to be successful on the web and not just strive for world domination I believe that it is possible to generate a lot of revenue directly from the user. In other words, make the user pay for the value you provide him. This strategy has one major benefit. it forces the entrepreneur to think only about user value. If he continues to provide value he earns a living. If he fails at it he won’t. An argument often provided against this is that someone is bound to copy your service and provide it for FREE. That may be so, but if your brand, business model, and innovation is aimed at providing the user with value then you simply ensure you evolve and keep that value flowing towards the user. You can leverage FREE tactics and still create direct revenues from your customers. And users will continue to pay for value.

Chris Anderson provides a nice example of how Freemium can be executed well and create excellent revenues. A good recipe from his post:

Build a community around free information and advice on a particular topic.

With that community’s help, design some products that people want, and return the favor by making the products free in raw form.

Let those with more money than time/skill/risk-tolerance buy the more polished version of those products. (That may turn out to be almost everyone)

Do it again and again, building a 40% margin into the products to pay the bills.

There are so many ways to create user value based business models. But it takes courage from both the entrepreneur and a possible investor. There may be easy money in FREE, but let’s face it. There are few companies that can create a sustainable business case  based upon advertisement revenues. Why not try to do the opposite. Try to provide your customer instead of an advertiser with value? You will find that there are enough people willing to pay for it. Remeber, Free is just a clever disguise for a concealed trap.

Who are you to think you are responsible for my privacy?

An interesting panel discussion with Google and Facebook opposing each other about data portabilty. Facebook refuses for now to implement Google’s FriendConnect. The reason Facebook won’t, according to spokesmen, lawyers and other executives is that Google violates their terms of use. FriendConnect could violate the user privacy, something very dear to Facebook.

A quote from the article written by Dan Farber:

Facebook’s Dave Morin defined openness as giving people control over the information they share and providing developers with the capability to build on top of the Facebook platform. Social data breaks down into three categories, Morin said: identity data, social graph data, and feeds and social actions. With 80 million users, Facebook has a responsibility to make sure that users understand what and how they are sharing information, he added.

David Recordon has a very nice way of saying that the Facebook approach is bullshit:

“What Facebook is doing (with dynamic privacy) is very laudable–if you choose to share something in one place, it should appear in another. It’s just not clear on how this dynamic privacy will work. If Facebook tries to do it by themselves and not with other people, it will be hard to make it really scale,” said David Recordon of Six Apart, who has been involved in data portability efforts.

While I do understand the need for privacy and protection for users, I also cannot help but feel that Facebook is playing its final cards in an already lost game of Walled Garden poker. Actually Dave Morin says two different and not so complementary things (I am paraphrasing here).

1. We need to protect user privacy
2. We need your data so that we can let 3trd party developers into our walled garden, thus making a whole lot of revenues

I believe that this whole privacy discussion is bullshit. Am I the only one finding it a bit ironic that I have to leave the safety of MY privacy at Facebook or Google to defend. They aren’t there to protect my privacy. They are there to “harm my privacy as little as possible” in order to make a few bucks. And to be honest, I’m fine with that. I understand that allowing such companies to access and work on the data I provide them I get services in return. But they shouldn’t be having this pathetic discussion over my privacy. They are at it because they have interfering business models. So let’s just quit this “laudable” privacy heroics and just talk about the things that are really what it is about.

There is only one person remotely capable of being responsible for my privacy, and that is me. If you seriously want to help me be in control of my privacy, then stop hiding behind your business models and terms of service. Provide me with easy to use privacy controls that do not need 10 pages of judicial language. Tell me exactly which switches I can set to protect my privacy, ad in return you can decide for yourself how much of the service you provide is free for me. I can understand the need to make revenues.

Stop choosing the path of advertisement harassment and 10 page terms of service while at the same time pretending it is for the “protection of the user”. We don’t need protection from either Google or Facebook. We need these giants to take the side of the user instead of the network.

If Facebook would be truly thinking user-centric, they wouldn’t be talking to Google about my privacy. They would be talking to me. They would provide me easy controls and also be very clear about the consequences of using those controls. If I protect all of my privacy then I shouldn’t expect much in terms of free services (as Facebook does need to make a buck). If I relieve my privacy controls and allow specific access to parts of my personal data, I get the service for free. It is simple, honest, and user centric. In that way I’m in control.

So please, stop doing all these “laudable” things. Hand me the controls over my privacy instead. Choose the side of the user once. It will help us all create a user-centric web. And it will stop us using the dreadful free but ads based business model that locks both the investor and the entrepreneur into walled garden thinking and holds us all in a web 2.0 Death Grip. Right now, a Facebook user is like a beautiful bird. The bird is free to fly anywhere it want, as long as it remains in the golden cage Facebook has provided them.

Friendfeed may be the early adopter RSS king, but Twitter is king of 140 characters

Already in 2006 Time Magazine voted the most important person on the planet to be YOU. They were dead wrong of course. In that year it wasn’t YOU that was important, it was THEM. Them meaning all of your friends you brought along to the different social networks that rose like volcano’s in a flat landscape. 2006 might have been the break through of many social networks and their FREE business models. These business models didn’t make YOU important, it made the network important (or social graph, only they didn’t use that terminology then).

Advertising networks gained momentum too. Everyone trying to get a piece of the Social Networking Walhalla harassing the user (that’s you) with advertisement. $ BLN dollar valuations of companies who’s main objective is to get those advertisement dollars rolling. The user gets his service for free, but as a result he has to put up with advertisement. That has got to be by far the worst nightmare of any Marketeer right? You have a potential customer, according to all of the semantic and contextual data the Social Networking site has collected for you. You show this potential customer an advertisement, making sure it fits the profile. Only to discover that this potential customer does the same thing he did in more traditional media, he ignores it. It is the catch 22 of web 2.0. Everyone trapped in the FREE business model where advertisement money is pumped around but the only one paying the bill is the advertiser who doesn’t get much value for his dear advertisement budgets. The social networking site is the laughing third party who collects the dollars. It’s a business model that can’t hold up much longer. At some point the advertiser should be doing his math and discover that he is paying an awful lot of money for social experiments that aren’t very effective. The nature of the business model is what is wrong with it. It is a business model based upon lock-in, upon force instead of freedom. You get a free service so you MUST put up with advertisement.

There is no end to the optimism of both web entrepreneurs and advertisers when it comes to the promises of web 2.0. Advertising, uhm I mean engaging with you customers, being able to use contextual and semantic information to serve him even better. The Über social graph is already being build by Facebook and the likes. And once the user is being tracked and traced across every destination he goes, the exploitation of that data surely will lead to the promised land.

The data collection going on on the web is immense. It is nearly impossible to visualise the amounts of data being collected by Google and everyone else. I’m betting the actual web and it’s data is probably an infinite small fraction of what is being stored on data hogging servers around the world. I can understand why it is being done (given what I just said above). But I can’t help but feel that it’s a rush to fool’s gold. I haven’t seen a computer algorithm yet that has mastered free choice. I don’t know any data profiling scheme that can make people behave like their profiles suggest.  Human nature isn’t that simple. That doesn’t mean no one is going to make a lot of money on this. I’m just saying that I doubt that all of this profiling will provide the advertisement world much benefits. You can’t make me like your message, just because the data says so.

We see this behavior now already. Even though this data analysis is in it’s infancy and much better algorithms will be thought of. Ever clicked on a Facebook ad served to you? Well, not many have. Ever bought some product because when it got in the way of you interacting with a friend, you thought, “hey, that’s convenient, gotta get me one of those”. It just doesn’t work that way.

I tried out the Friendfeed recommendation that has just launched and the Friendfeed community is wild about. It will serve you the “best” of Friendfeed of the last day, week or month. Using it brought me 2 important lessons:

1. I gotta get me some friends that aren’t Friendfeed fanatics. Almost every recommendation was a piece of content or discussion concerning this tool. Man these early adapters aren’t doing Friendfeed any favor with it. Hailing their trumpets, predicting the conquering of the entire world with a tool. Idiots in my opinion. Friendfeed is just a tool, and a nice one. But they are on to the same data collection I talked about earlier. Instead of just computer alogrithms, they try to use friends recommendations and discussions to filter out the important stuff. Too bad 90% of the discussion on Frienfeed is about Friendfeed itself. That data collection isn’t going anywhere for a while (Crossing the chasm is pretty difficult isn’t it). Or maybe it’s just me and my Friendfeed friends, I don’t know.
2. I gotta get me some friends that aren’t discussing the “downfall” of Twitter. Yep, that is where the other pieces of content were talking about. Same early adopters. Same boring stuff. Morons of course. The early adopters might have jumped the Friendfeed wagon,  Twitter is king of 140 characters. They don’t have to come up with noise filters, ranking algorithms, friends recommendations, semantic data collectors, or anything of the sort. They aren’t in the business of data collection and serving advertisement on that data. They are in the field of interaction. And interaction is the only thing that matters in web 2.0. Social Media consumption, creation, participation, it is all interaction. Sure they have stability issues and an angry early adapters mob against them. But they rule the 140 character world, and given the $ 1Bln spent in mobile SMS in 2007 I say Twitter has a better chance of becoming a successful social utility than Friendfeed.

I don’t like the sitting back and let the feeds come to you mechanism anyway. RSS has brought us really great ways to distribute content. But it has also killed the adventuring sprrit of the web user. Instead of wandering around this marvelous world of content and people waiting to interact, we sit back and let the feeds bring it to us. Such a waist of creative processes, of discovery. And such an incredible noise generator. We are screaming for noise filters, ranking algorithms, trust filters (who the hell thinks up this stuff), all to get a grip on the never stopping river of information flowing to us via RSS feeds.

Honestly, I don’t need filters to trust people, to know who ranks high or low, to know who is producing great content or noise. And I have serious doubts that ANY consumer outside the top web elite is dealing with that problem either. RSS is convenient but lazy. It brings you everything you always wanted, and a whole lot of noise with it. It needs noise filters, raking algorithms and all that other stuff. Computer algorithms telling me what to like or not. RSS is unintentional, it is sharing because we can. If there is no intent in sharing it pretty quickly becomes less valuable. That is why we all still love it to get an old fashioned letter or postcard in the mail. It is intentional and therefore so much more valuable. Try subscribing to less RSS feeds if you keep complaining about noise. It will solve your problem instantly.

I always have felt the Internet should evolve around you. Making you and the things you want to do most important. Not the data hogging, or the social graph. But that doesn’t mean that you can sit back and enjoy the ride. It also implies that you have a responsibility in this. You have to be willing to look around, to discover, to make choices. Not just let that RSS juice flow to you. I’m convinced it will work out in the end.

The way RSS is used now is a bit like us reading great books on well known museums. It’s fine.  But actually discovering a new museum, going there, seeing the things that are there, engaging, talking about it, that is where the value really is. And that is more valuable than any RSS feed I could possibly imagine. Friendfeed may be the early adopter king of RSS feeds for now. They are there to collect data, to see if a new kind of “Google” can arise out of social media. And I suspect they will be digging in the same hole where all social networks are digging into. But it’s content right now is a museum we have all seen already. And the discussions of the early adopters are running around in circles right now.

But Twitter is the king of 140 characters. They don’t need all that. They support a basic human need. They need more stability and a well executed business plan. But these 140 characters will be infinitely more valuable to us than any RSS feed with comments and likes will ever be.

On Twitter and the missed opportunity to execute a social utility business model

Bernard Lunn has written a good post on the (lack of) a social media business model. He writes about the difficulties for social networks to monetize using advertisement. Although he builds his storyline a bit different from me, he is saying a lot of things I believe too. A few days ago I wrote about the same subject in a post called “Advertisement holds web 2.0 in a death grip”. A nice quote from Bernard’s post:

If social media is not funded by advertising, it must be funded by subscriptions or transactions. Neither is easy.

Social media is fundamentally different – it is few to few, not one to one like telephone or one to many like traditional media. There is also a fundamental problem for advertisers. We are focused on communicating with each other, not looking at content with some hopefully relatively relevant ads attached. Any advertising in that context is an annoying interruption, unless we learn to tune out the ads so effectively that it becomes useless to advertisers.

Bernard analyzes what three major social networking sites could do. They all have 2 options, remain a walled garden, or open up and become a utility. Both paths, or fork in a road as he calls it, could lead to value creation. But if a social network remains closed it will become a niche. Bernard’s preference (as is mine):

The mass-market utility model will win out in the end for 3 reasons:

1. The social graph is so closely linked to communications, which has always been a utility model.
2. The ownership issues around the social graph are murky. A utility skates past that problem, saying “you own, we manage.” AT&T does not own your Rolodex, or insert ads when you are calling Mom because they own your connection to Mom.
3. The social graph has to be monetized in creative ways and the best way to make that happen is make it available to all the entrepreneurs and established businesses, on clear and simple terms.

I believe that Bernard nails it. Social interaction is something of all times. It is the most vital element of our on-line experience. Content creation and consumption isn’t nearly as interesting if there isn’t interaction. The interaction itself shouldn’t be supported by advertisement. Advertisement trespasses when I’m having interaction with my friends. I once, jokingly, said I started a countdown for the downfall of Facebook.  The reason for this countdown is that they are executing a wrong business model. They aren’t near that downfall yet, but if they choose to remain closed then the slow decline as Bernard also calls it will happen. They just don’t own enough of the Internet to make that work. They have a walled garden of 100M users, Google works on a walled garden of the entire Web population. They are different measures.

We have seen already one example of a very successful social interaction utility. Unfortunately this example is not a great example for a successful utility business model. It’s Twitter of course! Twitter has commoditised the 140 char message more effectively than anyone could ever dream of. It has the capability to become mainstream due to its addictiveness, interactiveness, fun. But it also has serious operational problems (which I don’t want to emphasize, they are really hard working on it and I wish them all the best). But to me Twitter is also the example of a missed opportunity for a social utility business model.

Twitter should have taken its popularity and become a social utility service other social networks could implement. By doing that they would not only have become the standard for short social communication messages in any social network, but they would also be able to execute an Amazon-S3 type of business model. There would also be opportunities to charge users for the utility they use. Maybe not in the web domain (although I could see premium and freemium services appear), but definitely in the mobile domain. That is where the growth of Twitter should lie. That is where the money is! And if they can think of a way to stop cluttering the inbox of a GSM, then they could make the crossover to mobile and become one of the most successful paid mobile services. They have taken the immense popular SMS (100 BLN revenues in 2007), and socialized it using the Twitter service. An incredible opportunity, missed by a long shot.

I sure hope that the utility model thinking will gain momentum in VC land. I also hope Twitter will make a turnaround in terms of operations and business model. I would hate to lose that service. I want it to become successful as a social utility business model. It will help us create the User Centric Web.

Free is a clever disguise for a concealed trap

I have been writing a lot about the problems I see with the current main stream web 2.0 business model. Free but ad based services.  There are several issues with that business model that I summed up in a post called “$16 Bln reasons to get out of the advertisement trap”. But what is worse about it is that since the major web companies use that business model, new web initiatives follow that lead without thinking about other possibilities. Current web 2.0 thinking is mediocre, lazy and opportunistic.

I am not an expert on these matters. I tend to look at the effects the free business model has on the customer. We are all affected by this business model. While it arguably has several benefits for customers it also comes with very distinct downsides. One of the most important problems with the free business model is that it leads to customer lock-in as, which is the opposite of customer freedom. Consider for a moment the possibilities that would arise if we would think the opposite of free. It might sound like dreaming, but there are many benefits to this, the major one being customer freedom. Everyone talks about the importance of data portability, open networks, open API’s etc. The focus is mostly on the technical aspects, as if we are trying to solve an incredibly difficult technical puzzle. But we tend to forget what purpose it has. It basically resolves two issues, customer freedom and putting the responsibility where it belongs.

Don’t take my word for it, rather read the stuff of experts in the field on it.

I came across several posts that discuss this business model and I thought it would be good to provide you with an overview. Chris Anderson has a nice overview of free discussions here. Kevin Kelly has written several great posts about free. His post called “Better than Free” sums up 8 excellent possibilities to charge services to customers. He really sums it up in just one punchline:

When copies are free, you need to sell things which can not be copied.

But he continues to deepen this thought and offers 8 ways to go about this. I’m going to try and summarise it a bit. Read his excellent article to get into the details:

Immediacy – Sooner or later you can find a free copy of whatever you want, but getting a copy delivered to your inbox the moment it is released — or even better, produced — by its creators is a generative asset.

Personalization — A generic version of a concert recording may be free, but if you want a copy that has been tweaked to sound perfect in your particular living room — as if it were preformed in your room — you may be willing to pay a lot. 

Interpretation — As the old joke goes: software, free. The manual, $10,000. But it’s no joke. A couple of high profile companies, like Red Hat, Apache, and others make their living doing exactly that.

Authenticity — You might be able to grab a key software application for free, but even if you don’t need a manual, you might like to be sure it is bug free, reliable, and warranted. You’ll pay for authenticity.

Accessibility – Ownership often sucks. You have to keep your things tidy, up-to-date, and in the case of digital material, backed up. And in this mobile world, you have to carry it along with you. Many people, me included, will be happy to have others tend our “possessions” by subscribing to them.

Embodiment — The music is free; the bodily performance expensive. This formula is quickly becoming a common one for not only musicians, but even authors. The book is free; the bodily talk is expensive.

Patronage — It is my belief that audiences WANT to pay creators. Fans like to reward artists, musicians, authors and the like with the tokens of their appreciation, because it allows them to connect. But they will only pay if it is very easy to do, a reasonable amount, and they feel certain the money will directly benefit the creators.

Findability — The giant aggregators such as Amazon and Netflix make their living in part by helping the audience find works they love. They bring out the good news of the “long tail” phenomenon, which we all know, connects niche audiences with niche productions. But sadly, the long tail is only good news for the giant aggregators, and larger mid-level aggregators such as publishers, studios, and labels. The “long tail” is only lukewarm news to creators themselves. But since findability can really only happen at the systems level, creators need aggregators. This is why publishers, studios, and labels (PSL)will never disappear. They are not needed for distribution of the copies (the internet machine does that). Rather the PSL are needed for the distribution of the users’ attention back to the works.

Alex Iskold continues the discussion with an excellent post called “Beware of Freeconomics”. He ads 2 interesting points to the free business model discussion. The first point Alex provides us is that free leads to a monopolistic market. Google has come, conquered and now rules the free market. While everyone has benefited from this, and Google continues to provide us with new innovations, it has one major drawback. Who can still compete with Google? They have the market, the money, the innovators, and basically kill off competition before it is born. You might have a great idea for a new startup, but how can you possibly compete with that?

As a side step, according to Comscore Google’s incredible growth is possibly endangered as they show a lower US click performance rate in January 2008. While I personally do not think Google’s growth is really in danger it does perhaps show that they are reaching a limit on their basic search revenues. Google is already anticipating on this  by making some bold moves into the mobile and social network markets.

A second point mentioned by Alex Iskold is that free leads to additional complexity. For example, you need indirect ways to make revenues when you provide services for free. Alex provides an example of the ad network as a middle man between the service provider and the customer. You offer an ad based product, but no one wants to pay for ads. Even though your user base might grow, you still lose money.

Free isn’t a holy grail for the user, the service creator, the advertiser, the investor. Free is basically a clever disguise for a bounded world in which we are all handcuffed and tied together in this catch 22 trap. It leads to customer lock-in, monopolistic behavior, the death of innovation, spoiled customers, monetizing network value instead of customer value, data hogging, and walled gardens. But worst of all it leads to the loss of focus on customer value. The free business model isn’t really “free”. Free always comes at a cost.

Free is a clever disguise for a concealed trap we are all locked into.

Facebook popularity will decline because of a wrong business model

In Dutch culture people rarely stand out of a crowd. There are a lot of sayings that (badly translated) essentially say something like: “just act normal, that’s crazy enough”, or “don’t stick your head out”. We all try to fit in, be the same and feel uncomfortable when people stick out of the crowd. If someone performs better than others, he or she almost apologizes for it (I was just lucky). In Holland it is not abut winning, it’s about playing the game. That’s probably why we will never win the world cup in soccer, in general perform good but not great on important tournaments like the Olympics or world cups.

Interesting enough a very similar tendency can be seen when people discuss the success of web companies. There are a few untouchables, companies we never speak badly off. Google is great, and there isn’t much it can do wrong.

In other cases however we tend to be more harsh. Think about the monopoly Microsoft had the past years and the way people started reacting to that. In some cases this leads to annoying customers or press, but sometimes it also leads to innovation and competition. If Microsoft hadn’t tried to monopolize their Internet Explorer there wouldn’t have been a Mozilla organization that is now celebrating it’s incredible 500Mlnth download of their popular Firefox web-browser.

It seems that when a new web initiative is showing incredible growth figures we tend to wait for it to start making mistakes or showing decline again. After the initial “wow” people start thinking about how this unnatural growth can’t go on forever and when that day comes, we all knew it would happen, right? This is exactly what seems to be happening with Facebook right now. They have been able to create unprecedented growth in the past 2 years and are now one of the largest Social Networks worldwide. But now bloggers are declaring Facebook to be dead after they had a first dip in their growth figures. In January 2008 the number of Facebook users declined from 8.9Mln in December 2007 to 8.5 Mln in the UK. This was the first decline after a 712% growth overall in 2007.

Why does Facebook stir up such emotions? Why are people waiting for them to fall? Is it because they grew too fast? Because they are constantly measured against the success of Google? Is it because Mark Zuckerberg seems to be having a difficult relation with the press and the blogging world? Or is it because people just love to see something so successful break down again?

I’m not sure. But I do know that screaming out loud Facebook is dead because of a small dip in the number of users in just one country is plain stupid. There are web services out there that wouldn’t mind having such a dip if they also had the number of users and traffic Facebook still has.

Personally I think Facebook will face some really difficult times and I have doubts if they will remain as popular as they are today. But I’m not basing this on a small dip in the number of users. I’m basing my opinion, for what it is worth, on their chosen business model. Facebook has fallen into the $16 bln advertisement trap and they can’t and won’t get out of it. I started a countdown on the downfall of Facebook a while back already. The business model, based upon providing a free service and compensating that with ad harassment, has an incredible upside. It allows services to attract users really quickly and show remarkable growth figures. But with the almost unnatural growth comes the pain. Facebook has faced platform issues. They face the backlash of unsatisfied users that organise themselves in protest groups within Facebook. They face the press and blogging fury that arose when they tried to monetize the build network using SocialAds and Beacon. They have to deal with friend spamming, which is caused by 3rd party application builders that want to lift off of the success of Facebook to create their own glory and fortune. And now they face the press that can smell blood. And all of this isn’t because of Mark Zuckerberg, the incredibly childish or lobotomy like applications Facebook has to offer its users. It’s the business model.

If your business model is based upon monetizing of the Social Graph or network that has been build then you are bound to make the network more valuable than its users. It means that spamming friends is ok, because in some cases these friends might just sign up for yet another zombie-like application. It means that showing ads to relevant profiles is more important than trying to get a meaningful interaction between a user and a brand. It means that customer lock in is much more important than customer or data portability. It leads to the false illusion that sheer numbers of traffic and number users are more important than the quality of the service you provide. And most important of all, it distracts you from the one thing that makes you different from all your competitors. The fact that you are there to provide the user value. Once you lose that notion, your business is likely to decline. And that is what will happen to Facebook and the like in the end. As long as they aren’t monetizing user value, they will be fighting a cause that will be lost in the end.

That is why we like Google so much. Google monetizes user value. They use advertisement, just like Facebook. But they have managed to make the advertisement in itself valuable within the context the user gets to see it.

That is also why Firefox will win in the end over Internet Explorer. Not because of their 500Mln downloads or their technically superior product. No, it will  be because they have chosen to open up the browser. to develop and innovate it with and by its users. To be open about the mistakes they have made and the bugs it still contains. And the assurance they will resolve those to make it a better product.

Facebook isn’t going down because we are all jealously waiting for them to fall down. Facebook is in trouble because they are forgetting the one thing that is really important in business. Provide the customer with value!

I will end this by quoting Rolf Skyberg who has said it better than I could have:

This “luxury lens” also puts close scrutiny on some topics like “social networking”. Is the value you get out of social networking in any way a luxury?

If you had unlimited resources (money), could you deliver a better and more profoundly useful experience than we’re seeing with FaceBook and MySpace?

If the answer is yes, then you should get on building it, because obviously somebody is not delivering on an opportunity.

Are we putting the blame on the user now?

A lot of different stories this morning all in some way related to you and me. Yes, we, the users, are under fire. Haven’t noticed it yet? Well, let’s see what is being said about us.

Mathew Ingram pointed me to a Business Week article in which it is said that User Generated Content is dead. The article even has a confronting title “Web video: move over amateurs”. Evidence from this bold statement came from examples where specific USG sites were closing down due to limited amounts of traffic. People now want professional content.

Mathew puts the finger on the spot when he says:

The thing that really bugs me about the BusinessWeek article is that there’s this false dichotomy between high-quality professional content and low-quality UGC crap. It’s not that binary, I would argue. It’s more like a spectrum, with professional content on one end, and as you move down the scale you get lower quality, until there’s your brother-in-law singing karaoke.

Is there a lot of UGC crap that only someone’s mother would watch? Sure there is. But there’s a lot of garbage produced by “professionals” that gets foisted on people through traditional media too, whether they want it or not. I’d take some half-decent UGC over that any day.

I agree with Mathew but would add an emotional aspect to it. When a user creates something and shares it with the world, he is essentially distributing emotions. Emotions of any kind. That is where the power and fascination of user generated content comes from. We often take the poor quality and amateurism for granted because we can almost feel what the user is trying to say. It is precisely for this reason I once argued that the music industry should stop thinking in terms of distribution music and start thinking in terms of distributing emotions. The first leads to suing illegal downloaders and failing business models, the lather leads to embracing the user and creating a business model on the user’s passions.

Then there is Jaron Lanier who writes an emotional post about not getting payed for his professional content.  I sympathise with Jason, but from a very different perspective. He takes the perspective of income for the creator, I would argue from the user point of view.

The web 2.0 free (but ad-based) business model leads to people like Jaron not being valued properly, but even more, to users not being taken seriously. Precisely for that reason I have argued for the need of a new revolution, this time a revolution in business models. This will lead to user centric thinking and monetizing user value. John Battelle points out to Jaron that the system itself isn’t corrupt, but that there is merely wrong execution. The best way to provide content for free, John argues, is by search. Exactly! In my opinion search is the only truly successful business model in which ads and free services work seamlessly together to provide value to the user.

So, let us not blame the user. It is the business model that works against us all. Let’s work on business models that provide the user the value he deserves and is willing to pay for!

Every generation needs a new revolution

Facebook and Google are getting a lot of attention these days. Everyone, including myself, seems to have a take on it and the urge to write about it. It is time to step back, observe and try to understand what is causing this.

The CEO’s of rivalling companies are falling over each other, often like little children. Personally I like Steve Ballmer best (seriously), he is such an incredible promoter. Just look at his great response to John Battelle’s question on search here, or his quote on Android being a paper tiger for now. Business week summarises a few here (including one of my comments ). Or how about Mark Zuckerberg, the man that seems to have gained a pop star status with his incredible success in growing Facebook to 50Mln users. On top of his success he seems to have stated that the user really has no choice when it comes to SocialAds.

If the Internet has brought us one thing it is the ability to start a hailstorm as a counter-force  to the scooping blogging community reporting on the successful initiatives or people.  The first hacks on OpenSocial have already been reported, as well as a recipe to block SocialAds. 100 Year old laws have been dusted off to explain that Facebook SocialAds are illegal. And some even started a countdown for the downfall of Facebook .

Web 2.0 brought us an explosion of innovations in social networking services. The biggest contest ever for the attention of the user. Web 2.0 companies create phenomenal free services and show unprecedented user base growth. It is all about eyeballs, who has the most users, the largest network. The waves of success were driven by free services. The question how create revenues being the last to answer. But with the success of all these services, monetization becomes an issue. Pressure is now on all the successful CEO’s, how to make revenues that live up to the incredible valuations being drawn up? The way out is provided by the advertisement business, nearly $ 42 Bln is predicted to be available in 2011 in the US only. It is this pile of money available that provides everyone a way out. It is the golden pot at the end of the rainbow that can be used to pay for the costs of free services and to justify incredible $15 Bln valuations of successful web 2.0 companies.

So why the emotional responses, why the polarising blog posts on these matters? Is it jealousy, because some are more successful than others? Maybe, but I am inclined to think it is something else.

I think it is because we are finally starting to realise that everything comes at a price. There is no such thing as a free lunch. Your “free” Facebook account is payed by SocialAds. Your perceived secure privacy on social networks isn’t as secure as you might have thought. The service you thought was build for your needs is now turning into an ad machine. One that takes your personal information and relationships and uses these to provide you with ads that, luckily won’t feel like ads according to Mark Zuckerberg (phew, a relieve here).

These services need your attention, draw you in because it is free, but won’t let you out once joined.  Try taking your personal belongings, your messages, your friends, your emotions with you from one service to the next. It can’t be done. It is the Catch 22 for web 2.0.

I think it is precisely this trap we have fallen into that is now delivering all these emotional responses on the web. We are finally beginning to realise that web 2.0 didn’t give us freedom at all. It provided a well disguised containment, a trap that lured us in. Beautiful sirens singing to us, backed up by bloggers, newspapers and magazines telling us it is all about you. And now with our  saviour Mark Zuckerberg telling us that there is  no way out. But Mark is getting a bit nervous with rivals like Google who, in perception at least, do offer a way out with OpenSocial and  Android.

It is becoming clear to me now that the current web 2.0 generation needs a revolution. If we want to get out if this trap then there is, as always, only one way to do this. We have got to take control of our lives on-line. Don’t let anyone tell you different. Your data is yours! It isn’t Google’s, Facebook’s, or Microsoft’s. We need to start making so much noise about this that these guys will be forced to open it all up. And you have the power to do so. You can use the strength of the network that you have created yourself to protest and oppose this confinement. I can’t wait for the first protest groups on SocialAds to appear on Facebook. Let’s see how many supporters will join that. And don’t get me wrong. I am not against ads, but I do oppose to the idea that we currently have no freedom because of ads!

And in revolution, there are always new thinkers and leaders that can  show us the way. My vote is with people like Doc Searl, David Recordon, Tim O’Reilly, Dick Hardt, Dave Winer and Rolf Skyberg. People that not just complain about this trap, but thoroughly understand it and provide possibilities to get out of it. There are $16 Bln reasons to get out if this web 2.0 advertisement trap and move into a new era of user centric thinking, of true interaction!

It is like President Jefferson already said so long ago: “Every generation needs a new revolution”.

The myth of SocialAds, Beacon and Insights: it ain’t gonna work!

The countdown continues. After I decided to write a post on the downfall of Facebook as their stealth ad system is being revealed, we are now on another day after. The day after Mark Zuckerberg announced his 3 way ad system for Facebook. For me the counter is starting to tick a little faster now, I’ll explain in a moment why.

As always I am looking around for analysis on this. In general people seem to be either positive about the move with a warning that it is a “dangerous way to go”. Or they are negative and warning about the user that won’t like to be hassled by his friends with commercial messages.

There are a few posts that drew my attention.

Nicolas Carr really hits Facebook hard with his post called ‘the social graft’. He says:

“It’s a nifty system: First you get your users to entrust their personal data to you, and then you not only sell that data to advertisers but you get the users to be the vector for the ads. And what do the users get in return? An animated Sprite Sips character to interact with.”

Mathew Ingram describes a mental picture of some guy barging into a party at my house and yelling about free pizza or T-shirts or something, and handing out coupons to all my friends while dressed up like a giant Coke can.

He would punch the guy entering his house in that way. I would probably too.

John Battelle wrote a small entry in which he adds to a quote from a CNET article from a Facebook executive:

“The company that can process the most data will win.” I’d modify that – the company that can process the most data intelligently and in context, wins”

I think John is right and wrong. Right, because the company that can process data intelligently and in context wins. Wrong, because Facebook isn’t the right context! That is why Google wins, the not only score better on clever and massive amounts of data processing, but they use it most intelligent in a context where a user is actually begging for advertisement attention (during a search).

Business Week takes the angle of the marketeer and advertiser who is excited about the new initiative in their post called Marketeers are your ‘friends’. They quote Mark Zuckerberg saying:

“The next 100 years is going to be different for advertising, and it starts today,” Zuckerberg told the crowd of 250 or so enthusiastic marketers and advertising executives who had gathered at a midtown loft for soft drinks, hors d’oeuvres, and a demonstration of Facebook’s new ad system. “Pushing your message out to people is no longer good enough—you have to get into the conversation.”

But who wants marketers in their conversation? If not enough do, the new news-feed ads will be bad news for Facebook.

But Mark, you aren’t getting into the conversation, you are really only trespassing. And btw, the example you provide where 2mln Facebook users join a suport breastcancer cause,  is actually a very bad example. People joined to support the good cause, not to support some brand.

Dave Winer, although he is positive on the move made by Facebook, ends his article with an excellent observation:

Long-term, however they both have problems because advertising is on its way to being obsolete. Facebook is just another step along the path. Advertising will get more and more targeted until it disappears, because perfectly targeted advertising is just information. And that’s good!

I think SocialAds are a bad idea. Actually I think the current web 2.0 free (ad-based) business model is a bad idea. There are 16Bln reasons to get out of that advertisement trap. And now Facebook is doing the wrong thing for the obvious reasons. Mark Zuckerberg couldn’t have said it any better than in this quote, taken from the press conference:

People will not be able to opt out of these social ads or turn them off, at least for now, unless they stop revealing information about themselves on Facebook. Says Zuckerberg: “It is an ad-supported service. It is a free service.”

You couldn’t be more right Mark! This is the Catch 22 of web 2.0. Facebook creates a service, drawing users to it by providing it for free, provide the user with the false illusion that his privacy is safe and then leverages the user profiles and the Social Graph network Facebook ‘owns’ and protects but didn’t create himself (the users did) by monetizing with ads. I said before it isn’t going to hold, as this business model is fueled form the wrong side. But I would go a step further and argue that SocialAds are based upon an entirely wrong assumption of friendship in the wrong context!

The power, according to Facebook lies in the user becoming a brand ambassador towards his friends. The best advice you can get is that from a friend. We all know this phenomenon. You are sitting with a friend and he tells you enthusiastically about a movie he has been too. Makes you want to go yourself, right? Why does that work? Because a lot of things happen at the same time. In the physical world there are many different stimuli that affect your behavior. Things like speech, sight, hearing, touch, feeling, movement, trust, relationships, common experiences or taste, context (like the fact that you are hanging out at your home together), all come together in your brain providing you with a feeling of value to your friends story. It also provides you the opportunity to DISAGREE with your friend.

But in the on-line world you lose most of these stimuli. In Facebook you get flattened stimuli from the newsfeed: “Alex went to this movie and he liked it”, or personalised ads using the profile information. But there is no “hanging out together, no voice, taste, touch or other stimuli, no way of agreeing or disagreeing with your friend. And worse, the stimuli aren’t in the right context. I’m not looking for advertisement there. And if I get these stimuli from my friends in my personal space, what will that do to the trust I have in them? At best I’ll try to ignore it, at worse I get fed up with my friend and disconnect him. Facebook will be left with the bargain hunters (get a free coke if you…), ad blind people (ignoring any brand or ad message), brand bashers (have you seen these morons trying to sell me….) and finally nothing as users will start to see through the advertisement trap they are in and move to another place where services provide real value instead of “an animated Sprite bottle to interact with”.

The very best one being from Doc Searl here. In his post called New World Disorder he quotes The Guardian with an article by Jeff Jarvis, Chaos theory: advertising cash will soon decrease,

Advertising is no one’s first choice as the basis of a relationship. For marketers, it’s expensive and inefficient. For customers, it’s invasive and annoying. And targeted advertising is only slightly more efficient and slightly less annoying. Clearly, the direct relationship between a customer and a company is preferable. But that direct connection cuts out the middlemen – that is the media.

So true. As said before. The web 2.0 bubble is building up way too much pressure, who has a needle?

My pitch for the Web 2.0 EXPO 2008

Rolf Skyberg twittered me to publish something about my proposal I submitted to the web 2.0 expo 2008 conference. (this after I confessed to him that in a moment of inspiration while reading his blog entry about the conference, I decided to submit a presentation). More on what I would like to present there in a moment.

Although I have a lot of thoughts on web 2.0 developments and the effect it has on human behavior, I am a relative unknown in this world. I started blogging quite recently (about 2 months ago ). I haven’t made great appearances yet on the web 2.0 conference scene (well, not as a presenter anyways, but you should see me at the bar). I am (not yet) a successful entrepreneur, haven’t had success or failure with starting new companies. I am working in a corporate environment at KPN, the Dutch Telecommunications operator (with the coolest job!). I am leading a really awesome and possibly earth shaking international non-platform user centric interaction web project (I’m getting carried away here), but it is still in stealth mode so not many people really would know about that either. So the question is, where do I get the idea that anyone is waiting for me to present something?

I hope for 2 reasons I might make it through the cut:

1. I have gotten almost 5000 people reading my posts since I started. There are quite a few regular subscribers now, averaging a few 100 readers dropping by each day, I get more comments on the things I write than the number of articles I posted, and people start linking to my blog. I don’t have a clue if that is a good performance or not, don’t really care about that. But I am really happy with the interaction and I do hope that some of you enjoy reading my posts
2. I haven’t found many blogs or bloggers that focus on the user perspective. Could be I’m horribly missing out on great blogs, but it seems that in that perspective I have something to add to this world.

So back to my web 2.0 expo submission. Looking back at the main themes I have been writing about, the amount of people reading about them (as sort of an importance indicator) I decided to take a stand on the most commonly used web 2.0 business model, the free (ad-based) service.

I have written some of my views on this in an earlier post called “16 Bln reasons to get out of the web 2.0 trap”, and have gotten some good responses on it (thanks guys). I think there are a lot of reasons why we need some lateral thinking and execution against the $ 16 Bln US ad revenue pressure on web service development.

The business model itself focuses the service provider to create traffic, build walled gardens and then leverage the value of the traffic and network build. Notice how I avoid using the word “user” in these sentences. It is not that there is no intention by the entrepreneur to deliver value to the users. But they are distracted along the way by the pull of advertisement revenues, investors, crazy valuations of big hits like Facebook, and tech bloggers all fueling this business model. Now with Steve Rubel leading the way to try and do things differently.

But where does that leave me as a user? I’m being spoiled by the idea that everything is free, which is obviously not true (someone has to pay for those servers zooming out there). I’m ignoring most of the “clever” ad and promotional activities that are flying around me on the web (it’s like zapping away from the commercials on tv really, same advertisement mistakes but now on-line). I’m confronted with services that often haven’t really thought about user value, UI, portability, privacy, flexibility etc. The service owner wants me always on and always at their place, while I want to disconnect when I feel like it and feel that they should come visit my place once in a while!

So we are all tied together in this together. In one hand we have the force of $16Bln on-line advertisement revenues making startups and investors focus on leveraging social network value and the quick buck. On the other hand we have the user being severely spoiled by getting all these services for free, but ignoring most of this $16 Bln user value reduction thrown in their face. The result is a perfect deadlock situation. Instead of innovating from a user centric perspective, the focus of most web 2.0 companies is on leveraging the social network value.

In my opinion this web 2.0 business model is doomed to fail as it is fueled from the wrong side. Not the by the user or user needs, but by the investor and the advertiser, backed up by the ADHD “scoop seeking” tech blogger publishing about it (and other bloggers demystifying the popularity of that). To get out of this web 2.0 advertisement trap we need some lateral thinking and entrepreneurs that can think beyond the obvious business model.

In this presentation I intend to describe this deadlock in more detail, show how the user gets around them as it doesn’t provide him true value, and provide suggestions for alternative business models to get out of this trap. The companies that can leverage user value instead of network value will be the successful ones. They will hold the needle that pops the web 2.0 advertisement bubble and move into a new evolution of the web.

What do you think? Is it worth your valuable time to listen to such a presentation? Do you have suggestions to improve on the story line so that my chances of making it through the cut might just increase? Have you done any lateral thinking yourself and came up with brilliant new business models? Let me know, I would love to hear them.