THE WEB & BUSINESS DIGITAL Waggener Edstrom Worldwide |Ged Carroll |November 17, 2008

THE WEB & BUSINESS: A little bit of scene setting Web 1.0 New economy Transactional web Knowledge economy Web 2.0 Forces of disruption Challenges

A little bit of scene setting

Web 1.0

New economy

Transactional web

Knowledge economy

Web 2.0

Forces of disruption

Challenges

BUSINESS The etymology of "business" relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. The term "business" has at least three usages, depending on the scope A particular company or corporation The generalised usage to refer to a particular market sector, such as "the music business" and compound forms such as agribusiness The broadest meaning to include all activity by the community of suppliers of goods and services. However, the exact definition of business, like much else in the philosophy of business, is a matter of debate

The etymology of "business" relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work.

The term "business" has at least three usages, depending on the scope

A particular company or corporation

The generalised usage to refer to a particular market sector, such as "the music business" and compound forms such as agribusiness

The broadest meaning to include all activity by the community of suppliers of goods and services. However, the exact definition of business, like much else in the philosophy of business, is a matter of debate

A LITTLE BIT OF SCENE SETTING: CONFLICT The internet and counterculture Homebrew computing Hippie culture Stewart Brand Libertarianism Open Source Social web MAKE culture The internet and ‘The Man’ ARPAnet Commercialisation of the web Technology bubble Telecoms bubble IT bubble Dot.coms Google age

The internet and counterculture

Homebrew computing

Hippie culture

Stewart Brand

Libertarianism

Open Source

Social web

MAKE culture

The internet and ‘The Man’

ARPAnet

Commercialisation of the web

Technology bubble

Telecoms bubble

IT bubble

Dot.coms

Google age

WEB 1.0

THE NEW ECONOMY Network effect Perfect price economy Arbitrage The long tail or global niches as it was called then Adhocracy Changing nature of free

Network effect

Perfect price economy

Arbitrage

The long tail or global niches as it was called then

Adhocracy

Changing nature of free

TRANSACTIONAL WEB Businesses went online because they saw a vast untapped marketplace Brochureware – replication of printed literature in pixels A canonical "dot-com" company's business model relied on harnessing network effects by operating at a sustained net loss to build market share (or mind share) What’s technically possible and hang the user experience Reduce the costs of processes Circumvent size, reputation and entrenched brands Circumvent government regulation Click through advertising Extremely measurable and trackable Traditional direct response marketing moved online Brand-building is a struggle Cheaper ongoing costs of distribution in electronic publishing Paid subscriptions Online marketplaces

Businesses went online because they saw a vast untapped marketplace

Brochureware – replication of printed literature in pixels

A canonical "dot-com" company's business model relied on harnessing network effects by operating at a sustained net loss to build market share (or mind share)

What’s technically possible and hang the user experience

Reduce the costs of processes

Circumvent size, reputation and entrenched brands

Circumvent government regulation

Click through advertising

Extremely measurable and trackable

Traditional direct response marketing moved online

Brand-building is a struggle

Cheaper ongoing costs of distribution in electronic publishing

Paid subscriptions

Online marketplaces

HIGH CASUALTY RATE Businesses went disappeared because: There wasn’t sufficient demand for the products or services offered They burnt through cash base before making a profit People only use online services if there is a benefit (its easier to order pizzas by phone than by WAP) New build business processes didn’t work Couldn’t compete head-to-head with established brands Regulation caught up with businesses Online advertising dropped 27% post-bubble Restrictions on payment systems (merchant status and transaction costs) Technology did not match expectations

Businesses went disappeared because:

There wasn’t sufficient demand for the products or services offered

They burnt through cash base before making a profit

People only use online services if there is a benefit (its easier to order pizzas by phone than by WAP)

New build business processes didn’t work

Couldn’t compete head-to-head with established brands

Regulation caught up with businesses

Online advertising dropped 27% post-bubble

Restrictions on payment systems (merchant status and transaction costs)

Technology did not match expectations

KNOWLEDGE ECONOMY Concept popularised by Peter Drucker through his book The Age of Discontinuity Global village Collective intelligence / hive mind Business clusters around areas of expertise Hard to regulate, restrict or tax Locked into systems and processes higher business value than when between an employees ears

Concept popularised by Peter Drucker through his book The Age of Discontinuity

Global village

Collective intelligence / hive mind

Business clusters around areas of expertise

Hard to regulate, restrict or tax

Locked into systems and processes higher business value than when between an employees ears

WEB 2.0

WHAT IS WEB 2.0? O’Reilly Publishing

WEB AS A PLATFORM Social networks Widgets Applications XML APIs Publishing platforms Blogger Letseat.at On Demand Computing Amazon EC3 MediaTemple SaaS Salesforce.com Google Office Click and build tools DoodleKit Dottemplate Iompi Crowdsourcing / Prosumption Get Satisfaction Wikis Amazon Mechanical Turk

Social networks

Widgets

Applications

XML

APIs

Publishing platforms

Blogger

Letseat.at

On Demand Computing

Amazon EC3

MediaTemple

SaaS

Salesforce.com

Google Office

Click and build tools

DoodleKit

Dottemplate

Iompi

Crowdsourcing / Prosumption

Get Satisfaction

Wikis

Amazon Mechanical Turk

WEB OF NO WEB

WEB OF NO WEB Web and offline world no longer distinct Offline advertisements usually: List a website Show you what to type in the search box Interacting with online content in the real-world, succeeding where virtual reality failed QR Codes Twitter Nintendo Wii controller Apple iPhone Every transaction requiring research goes online now: Google as reputation engine Charlene Li described the future of social networks as ‘being like air’

Web and offline world no longer distinct

Offline advertisements usually:

List a website

Show you what to type in the search box

Interacting with online content in the real-world, succeeding where virtual reality failed

QR Codes

Twitter

Nintendo Wii controller

Apple iPhone

Every transaction requiring research goes online now: Google as reputation engine

Charlene Li described the future of social networks as ‘being like air’

WHERE 2.0 Mashing up web technology with location information Google Earth Flickr maps Nokia maps Fireeagle Dopplr Being able to reach the customer at the right time, the right place with the right information Advertising moves from being selling to useful information Requires balance Utility for customer Reward for their attention Privacy respected

Mashing up web technology with location information

Google Earth

Flickr maps

Nokia maps

Fireeagle

Dopplr

Being able to reach the customer at the right time, the right place with the right information

Advertising moves from being selling to useful information

Requires balance

Utility for customer

Reward for their attention

Privacy respected

WHERE 2.0 CONT’D Minority report is close to real-life: it just doesn’t look as sexy Parcel tracking Mobile phone tour guides Location-based special offers Pay per mile car insurance Congestion charging Location-based social networking Location-based shopping and bar / restaurant recommendations

Minority report is close to real-life: it just doesn’t look as sexy

Parcel tracking

Mobile phone tour guides

Location-based special offers

Pay per mile car insurance

Congestion charging

Location-based social networking

Location-based shopping and bar / restaurant recommendations

FORCES OF DISRUPTION

FORCES OF DISRUPTION Culture / politics clash Information must be free Open source and creative commons movement Technology moves faster than business models Music and film industry Crowdsourcing Amazon’s Mechanical Turk service Carnegie Mellon ESP game Rapid development Web as a platform and OSS reduces development costs and times considerably Start-up on a credit card - Trumours Margins in the long tail Most music masters won’t be remastered for online distribution Self-publishing costs falls dramatically Blogging versus specialist media Self-published pornography versus the adult entertainment industry Flickr versus stock photography Scoopt Consumer newsgathering Badvocacy

Culture / politics clash

Information must be free

Open source and creative commons movement

Technology moves faster than business models

Music and film industry

Crowdsourcing

Amazon’s Mechanical Turk service

Carnegie Mellon ESP game

Rapid development

Web as a platform and OSS reduces development costs and times considerably

Start-up on a credit card - Trumours

Margins in the long tail

Most music masters won’t be remastered for online distribution

Self-publishing costs falls dramatically

Blogging versus specialist media

Self-published pornography versus the adult entertainment industry

Flickr versus stock photography

Scoopt

Consumer newsgathering

Badvocacy

BIBLIOGRAPHY

BIBLIOGRAPHY Encyclopedia of the New Economy – Wired Magazine From Counterculture to Cyberculture: Stewart Brand, the Whole Earth Network, and the Rise of Digital Utopianism by Fred Turner Marketing to the Social Web: How Digital Customer Communities Build Your Business by Larry Weber Now or Never : How Companies Must Change Today to Win The Battle for Internet Customers by Mary Modahl The Groundswell by Charlene Li and Josh Bernoff Free Culture: The nature and future of creativity by Lawrence Lessig cultures@siliconvalley by J. A. English-Lueck What is web 2.0? B y Tim O’Reilly The Age of Discontinuity by Peter Drucker

Encyclopedia of the New Economy – Wired Magazine

From Counterculture to Cyberculture: Stewart Brand, the Whole Earth Network, and the Rise of Digital Utopianism by Fred Turner

Marketing to the Social Web: How Digital Customer Communities Build Your Business by Larry Weber

Now or Never : How Companies Must Change Today to Win The Battle for Internet Customers by Mary Modahl

The Groundswell by Charlene Li and Josh Bernoff

Free Culture: The nature and future of creativity by Lawrence Lessig

cultures@siliconvalley by J. A. English-Lueck

What is web 2.0? B y Tim O’Reilly

The Age of Discontinuity by Peter Drucker

© Waggener Edstrom Worldwide 2008