July
18
This is the last post of a series of posts that predict a complete change on web 2.0, a crash of web 2.0 or a new web 2.0 redefined business model.
In the last post “Hosting 2.0: Web 2.0 Business Plan ”, I wrote about the business plan of websites like eBay, Amazon and Yahoo; and how their business plan made them Fortune 500 companies. I also wrote about today’s business model, the business model of web 2.0. I gave you true and real facts about MySpace, Youtube, Facebook and Twitter. You probably learned that these companies are still not profitable and that their investors have lost millions of dollars due to their monetizing strategies and high hosting costs.
I really don’t know if you believed me or not. And I don’t care if you already stopped reading this post. The fact is that I know that there’s a huge problem with today’s business model and I would like to give out some possible solutions and may or may not work.
Possible solutions that won’t work:
1.-Premium Accounts: One of the monetizing solutions that I’ve heard lately is the premium account. A premium account could be offered to specific users that may be willing to pay sums of money to get additional features of the website.
Why it won’t work?
Copycats: There are thousands of web entrepreneurs trying to make it in this business. You start charging users and a copycat will duplicate the same website but with free accounts.
And sorry, but web 2.0 means “free”.
2.- Better Technology: A reasonable solution would be to improve the capacity of databases and bandwidth of today’s servers. And this will happen, or it’s already happening. This seems as a perfect solution and it will surely lower your hosting costs.
Why it won’t work?
Technology goes hand in hand. If you improve the capacity of web servers, it would automatically force you to improve the technology of your website. Why? If you’re not at full working capacity, your competition will and it will send your website to oblivion.
An example: Windows 3.1 could run on a 386 PC with 15MB of Hard Drive and 3MB of RAM. Get the picture?
- Fire all your employees: Well, we all know that you’re the brains behind the operation. You could cut costs by firing all your work force and move to your old office (your basement).
Why it won’t work?
Your company works on a system. This system consists on CEO’s, CFO’s, and CMO’s, accountants, lawyers, programmers, designers, an office boy and a cleaning lady. You know that you can’t go back to when you were the one who got the whole work done. Besides, your website’s growth would get stuck and you’ll be out of business in no time.
- Banners all over the place: You could always put a banner on every corner or every little space left on your website.
Why it won’t work?
As I said on my last post, do you think that there’s enough advertising online to keep for billions of websites profitable?
- Go Public: If Amazon, Yahoo, eBay and Google did it, why can’t you?
Why it won’t work?
As I said on my last post, Amazon, Yahoo and eBay had a solid business model with a solid income and a solid projection. Facebook, MySpace, Twitter or Youtube, as independent companies, couldn’t go public because they don’t have what eBay, Amazon and Yahoo have.
Possible solution that may work:
Time has come to tell you about the only solution that I believe that’s viable, doable and that’s the future of the web and web hosting.
Before telling you about my theory, I want to tell you that I’m not an expert, I don’t have a PHD and I didn’t go to Harvard. This is my personal opinion and if you’re reading it, it means that you’re interested in my blog’s topics, my personal thoughts and how I write.
Hosting 2.0:
I’m sorry to tell you that web 2.0 went wrong from the beginning. Yes, it was the way to go, and we needed it as a new and improved version of the Internet. Like I said on the other two posts, I blame it all on the business model implemented by the first generation of web 2.0 websites and the investors who approved and promoted this business model.
The number of users of the internet grew significantly thanks to web 2.0. And we do owe web 2.0 our dependency on computers and the web in our daily lives. But the problem started when all these users went hungry for more; more websites, more tools, more information, etc. They wanted it all, but they wanted it for free. “Free it shall be” and the number of users grew and grew.
It’s clear that people are the core of every website, especially in web 2.0. Websites provide the platforms and people provide the content. It’s a fair trade, right?
Well that was the arrangement when web 2.0 was born. In this arrangement the user didn’t have to disburse any money and the website would pay for hosting and employees, keeping 100% of the revenue.
But web 2.0 websites missed out on the fact that the content provided by its users would keep on growing, requiring more web servers with higher costs but with the same level of income.
For websites like MySpace, Facebook, YouTube and Twitter, it’s too late; too much content, too much hosting costs and not enough advertising revenue.
So here’s my solution:
If MySpace, Facebook, YouTube and Twitter want to be profitable and keep on growing, they need to solve their cash flow problems. If Revenue is not the problem, then they need to solve cut down their costs.
How?
Once again the Internet must involve it’s users to pay the bills. We all know that you can’t ask them for any money (we already talked about this), so you need to indirectly share your costs.
- A user wants to upload a video on YouTube?
Instead of uploading the video on YouTube’s servers, the user leaves it on his computer and YouTube access his computer every time it needs another user wants to watch it.
- A user wants to upload a photo on Facebook?
Instead of uploading the video on YouTube’s servers, the user leaves it on his computer and YouTube access his computer every time it needs another user wants to watch it.
The user keeps the picture on his computer and Facebook will get when it’s required.
Do you get the picture?
I decided to write a 4th post since I know that there a lot of questions that are going to surge from this post. In that post you will get my whole description of shared hosting.
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Benjamin Cip (1)
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JoseGregorio (1)
WHoaaa … I just heard if Facebook get their financial problem, many newsmedia said how this most favorite side has turn a college student into multi billonaire instantly and how it grew so fast.
Anyway, thank for sharing, I would like to read more and I will crosscheck with other for sure
Hi Arief, are you talking about Mark Zuckerberg? if so, Forbes said the Mark could have more than $1.5 Billion, when Facebook got valued at $15 Billion. Now, Facebook is valued at $6.5 Billion and they have taken a lot more fund raising money, so I guess that now he’s not a even a billionaire.
If Facebook doesn’t fix their financial problems then I don’t how much can they last.
Facebook, Google etc. have noticed their “problems” in the recent years. And now they working to bring out something new (maybe coming soon) in order to sustain their business. We’ll wait and see.
Great post as usual, Alfredo.
Exellent post! Will you add a connect with Facebook plugin on your blog? I’m getting a lot more traffic to my blog, I don’t know wether it’s thanks to Hibburito or your blog, but according to Alexa and Hostgator, India is the first country where most of my visitors come from. I believe India is fast growing nation! Anyway, I would like to thank each of my readers for visiting my blog!
Hey Jacob, wellI hope they come up with a solution soon. In this post I said what I thought that it may be a solution.
Hi Ben, thanks. I also receive a lot of traffic from India, but I get my stats from Google Analytics and not Alexa. I hope that Hiburrito is getting you a lot of traffic. I have a tip for you, why on your next WOP you don’t use another picture? You banner will appear next to your WOP and you will attract a lot of more voters.