Thu, Nov 02, 2006 - Page 9 News List

Small is beautiful for the Net giants

`Web 2.0' highlights how the online world is changing. Amateurs come up with the ideas, then the big boys open their wallets

By Julie Meyer  /  THE OBSERVER , LONDON

At the European Technology Roundtable Exhibition held in Barcelona from Oct. 8 to 11, Skype co-founder Niklas Zennstrom announced that now, just three years after Skype started, it accounts globally for 7 percent of all international telephone calls. I couldn't help thinking that this fact about Skype is just one of many clear indications that we are entering a completely new world -- as far as technology is concerned.

Whether you call it a new world or a profound dislocation in society depends on your viewpoint. What is certain is that very few of us -- possibly none of us -- can really know what's going to happen next.

What exactly is the difference between Web 1.0 and Web 2.0? In essence, Web 1.0 was all about creating simple but effective Internet versions of real-world businesses where selling could happen on the Web, whereas Web 2.0 really uses the Internet as a completely new way to market to people. "Selling" has shifted to "buying" because the user is in control. He or she broadcasts his or her profile, tendencies and preferences in a way that is picked up by Web 2.0 technology infrastructure and marketing tools.

New phenomena such as YouTube and MySpace give a home to people who want to broadcast their videos, profiles and communications. This is another feature of Web 2.0.

I, as a user, don't want to be scheduled. That is, I don't want my TV to tell me when I can watch something and what I want to watch. I want to both post my own content and watch other people's content, videos and postings whenever I choose. I program the Web; it doesn't program me.

Chad Hurley, the 29-year-old, newly wealthy chief executive officer of YouTube, was quoted in Forbes last week as saying: "Amateurs can create something just as interesting."

That's the rub for large media companies. Their "content" is no longer deemed to be the gold standard. Ordinary folks with Web cams, video tools, personal Web sites and so on, can make interesting "content" too.

So where might the world be going? At Google, they are convinced that they know. I recently came back from the Google Zeitgeist event held in Silicon Valley. It was an invitation-only event for about 400 people and the speakers included Michael Dell, Colin Powell, Sir Martin Sorrell, Ed Zander of Motorola, Mark Zuckerberg of FaceBook and the Google founders themselves.

After a major dose of the latest developments in online advertising, targeted marketing tools and all sorts of other new marketing techniques, my conversations from Zeitgeist were put in context only four days later when Google acquired YouTube on Oct. 9 for US$1.65 billion.

The truth is that mergers and acquisitions is the new research and development. Major platform companies, such as News Corp, Yahoo and Google, in effect encourage ingenious start-ups to plunge into the marketplace and engineer dynamic growth and customer acquisition from an inspired idea. Once they have, their growth will be massively encouraged by the prospect of being acquired by the platform company.

Any business that has a terrific idea and can use viral marketing to win large numbers of users and gain significant market traction can look forward to a potentially enormously valuable market position.

At heart, though, a business that wants to enjoy this kind of success must be able to offer a simple but powerful customer benefit.

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