SiliconAlley.com carries a story today by Chris O’Brien from the San Jose Mercury News, complaining broadly about the “laziness” among web 2.0 startups toward innovating new forms of monetization for applications that the public seems to have decided will always require free content or access.
O’Brien tries to cover his tail in the final paragraphs, touching on a company called crowdSPRING that is creating a marketplace for creative services. But in sum, he seems depressed at the lack of innovation around monetization.
I beg to differ. I see a lot of companies, and pretty much every one of them is concerned with monetization. The ones that are banking on salvation by M&A tend to be ones that A) came out of the gate with good growth and even better PR B) found themselves with slowing growth but a healthy user base C) but found that base still too small to really generate meaningful revenues via advertising—especially when compared to the capital they may have taken on board during their run-up.
I think we are already seeing a next-generation of startup emerge even before the current wave—about whom much of what O’Brien says is true—that is highly focused on money, if only in terms of controlling costs significantly in order to have a long enough ramp to try and build a user base.
Moreover, companies all across the Web 2.0 board are starting to offer premium services or virtual asset sale options on top of their free, base-level services (Picnik, Flypaper, SynapticMash, Hive7, Challenge Games, etc.). In addition, many companies are experimenting with novel payment approaches (deferred: billmelater, shipping: Amazon,voluntary payments: TipJoy, and perhaps Twitter & Facebook for more micropayment options). Many are leveraging the affiliate networks of larger partners like Amazon and Microsoft’s Cashback Search program. Others are looking at the “gift economy” and imagining how the fact that Facebook users will gladly spend $1.00 to throw a virtual gift at someone might apply to broader economic situations. Others are creating marketplaces just like crowdSPRING’s (oDesk, Flypaper, SlideRocket).
As for Facebook: I have a higher degree of confidence than many that Facebook has learned a lot between the first F8 and the second. I expect that by the third (and if they don't screw it up), there will be some serious cash rolling in.
Seems to me there is a lot going on.
