How to join the Web Ecosystem
Matt McAlister
Yahoo! Developer Network

TOC
• What is the Web Ecosystem
• Opening Out
• Opening In
• Network Effects
• Advertising

Ecosystem

Software stacks are made of dependencies

inter-
Ecosystems are made of inter-dependencies
• Hosts
• Parasites
• Reproduction
• Food chains
• Producers
• Consumers
• Evolution

Platform concepts compared
HBR, “Platform-Mediated Networks:Definitions and Core Concepts”, Jan 2007

It’s all about platforms, not destinations
It’
“I have really stopped thinking of Hot-or-
Not as a destination site and worry about
how many people are using our service
no matter where they are. The concept
of a destination is so 1999. I think you are
going to see a big shift. People will go
where they will go. The world is evolving.
Sites like HotorNot are starting to see
themselves as services and less as
destinations.” -- James Hong, CEO of
Hot-or-Not
Source: http://www.techcrunch.com/2007/10/16/should-hotornot-become-just-a-facebook-app/

O’Reilly’s Make/Craft Magazines in the wild
Reilly’

Related example: Motorcycle manufacturing
“In contrast to more traditional, top-down
approaches, the assemblers succeed not by
preparing detailed design drawings of
components and subsystems for their suppliers
but by defining only a product's key modules in
rough design blueprints and specifying broad
performance parameters, such as weight and size.
The suppliers take collective responsibility for the
detailed design of components and subsystems.
Since they are free to improvise within broad
limits, they have rapidly cut their costs and
improved the quality of their products.”
John Hagel and John Seely Brown, Connecting Globalization & Innovation

Opening Out

Blogging/RSS
Opening Out: Blogging/RSS

machine-
Give others machine-level access to your data
mysite.com
startup.com
newapp.com
Publisher APIs

API Example: Flickr

Opening Out: Pipes mashups

Opening In

The Importance of User Data
“One of the key lessons of the Web 2.0
era is this: Users add value. But only a
small percentage of users will go to the
trouble of adding value to your
application via explicit means. Therefore,
Web 2.0 companies set inclusive defaults
for aggregating user data and building
value as a side-effect of ordinary use of
the application… They build systems that
get better the more people use them. ”
Tim O’Reilly
“What is Web 2.0?”, September 2005
http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what-is-web-20.html

Opening In: Community matters more than their
comments

Opening In: Instructables

Opening In: Wesabe

Misguided Incentives
• \"An act of love drastically changes meaning
when one person offers the other money at
its end, and a dinner party guest who will
take out a checkbook at the end of dinner
instead of bringing flowers or a bottle of wine
at the beginning will likely never be invited
again.“ – Yochai Benkler, Coases’ Penguin
• \"I've never seen UGC sites as the least bit
driven by money. They are driven by pride,
the desire to be first, reputation, whuffie. But
dollars? That often screws it all up.“ – John
Battelle

Network Effects

The Network is the Computer
The network effect is a
characteristic that causes a
good or service to have a
value to a potential customer
dependent on the number of
customers already owning
that good or using that
service.
For example, by purchasing a
telephone a person makes
other telephones more useful.
http://en.wikipedia.org/wiki/Network_effects

Last.fm vs Pandora

over…
This battle is nearly over…

…or is it?!

Last.fm is my data broker

Artists I like playing soon and nearby

Advertising

Implicit user data can drive $

Implicit user data can drive $

Advertising networks and exchanges

Conclusion

Hire more
engineers…!

The efficiency war is here
\"The average export price of
Chinese [motorcycles] has
dropped from $700 in the late
1990's to under $200 in 2002.
The impact on rivals has been
brutal: Honda's share of
Vietnam's motorcycle market,
for instance, dropped from
nearly 90 percent in 1997 to 30
percent in 2002.“

Resources
Books, Papers, Articles
• “Connecting Globalization & Innovation”, John Hagel and John Seely Brown
• “The World Is Flat”, Thomas Friedman
• “What is Web 2.0”, Tim O’Reilly
• “Coase’s Penguin”, Yochai Benkler
• HBR, “Platform-Mediated Networks:Definitions and Core Concepts”, Jan 2007
Blogs About Publishing Business
• Rex Hammock
• Paul Conley
• Scott Karp
Important Industry Blogs
• PaidContent
• ProgrammableWeb
• Umair Haque’s Bubblegeneration
• Fred Wilson
• Lawrence Lessig
• John Hagel’s Edge Perspectives
• Nick Carr’s Rough Cut

Thank you.
Matt McAlister
http://www.mattmcalister.com/
mattmcal@yahoo.com
408-349-2705