Every few days, someone asked me "What is Web 2.0?" They usually have a second question "How can I use Web 2.0 to get rich?"

Here's a guide to Web 2.0. First, let's look at the various types of websites.

Let's call the first websites "Web 0.0". These were informational sites (also called "brochureware") from 1994-98. They offered information, such as andreas.com or NewYorkTimes.com. Most importantly, the information was on a one-way street from the author to the reader.

In 1998, ecommerce turned websites into online catalogs, such as EddieBauer.com or Amazon.com, where you can browse an online catalog, add items to a shopping cart, and carry out a credit card transaction. We could call this "Web 1.0". This was also one-way communication from the company to the customers.

In both types of sites, the visitors were passive readers. The relation between the creator and the visitor was one-way. There was no contact among the visitors.

Web 2.0 changes this relation. Web 2.0 became a clear concept in Summer 2006. Parts of Web 2.0 tools have been around from the beginning of the web, but the general concept is different from the previous web:

Here are the main features of Web 2.0:

- Functionality, Not Informational: Instead of websites that are a resource for information, the websites are tools that run within browsers. You don't read the site, you use the site. This is also called RIA (Rich Interactive Applications) which use Ajax, Flash, or Adobe Flex. For example, GMail runs inside a browser window (more examples: Facebook, YouTube, Picasa, Google Maps, and so on). This moves away from the operating-system-and-software model (which is a problem for the Microsoft/Intel desktop computer monopoly). (This will also be a problem for LINUX and Apple desktop computers.) Browsers can run on just about any OS and digital device: laptops, PDAs, cellphones, and so on.

- Social Sharing (also called UGC / User Generated Content): The content comes from users, not the owners of the website. Users create, add, edit, modify, and most important: they share the content. They edit and add to each other's content (instead of UGC, it should be UMC "User-Managed Content"). Sharing also includes mashups (users combine various tools or content to create new tools). They share image, video, music. They share comments. This allows social networking, tagging (adding keywords to the item), and tag clouds (a visual representation of the top keywords). An good example is Wikipedia and other wikis, along with the user comments at Netflix, Amazon, YouTube, and countless blogs.

The previous web (0.0 and 1.0) was a one-way street, with the site owners in control. In Web 2.0, the owners only provide the tool. The users use the tool to connect with each other. This is the fundamental change in Web 2.0.

Some Web 2.0 sites have many of these elements. Some have only a few. But when you understand this, you'll see these are clear differences between Web 2.0 sites, informational sites (e.g., NewYorkTimes.com), and ecommerce sites (e.g., EddieBauer.com).

Many Web 0 and Web 1 sites can be turned into Web 2 sites. Just add discussions and ratings. Amazon, Netflix, and others do this.

But this might not be a good idea for every site. If the users start to discuss the company and products, they might share information about better products or prices from other companies. Or vote against the company's products.

Which brings up the question: if they're not ecommerce sites, how will they make money? Very few Web 2.0 have ecommerce features (products, shopping carts, payment). If they plan to make money by generating lots of traffic and displaying ads, well... remember what happened to portals and content sites in 2000. They had the same idea. When a few sites made money, hundreds more were created to do the same thing. This created too many companies after the same amount of advertising money. Most of them went bankrupt.

So that answers your second question: "How to get rich?" Figure out how to create a sharing site that includes ecommerce. However, there are several problems with Web 2.0:

- Most of these companies don't make money. Their goal is to get a large user base and sell the company to Google/Yahoo/Microsoft (GYM). How is GYM going to make money with these? Who cares? That's GYM's problem.

Copyrighted content is copied (movies, music, etc.) and posted to the sites for sharing. If you remove the copyrighted content from many Web 2.0 sites, the only thing left is videos of cats. Google paid $1.65b for YouTube and got a $1b copyright lawsuit.

Social tagging is a great idea... if everyone is honest. But it's easy for a small group of people to use social tagging to boost a product or lower a competitor's ranking. This killed AltaVista (remember them? the Google of the 90s). Digg rankings and Alexa scores are worthless.

In "Web 1.0", the idea was to create dotcoms, get VC funding, and IPO them. Their revenue model was to get more investor money. Whether the company was sustainable was irrelevant. Investors got ripped off. Many Web 2.0 companies are the same scam, er, business strategy but instead of IPOing, the liquidity event is a sale to GYM. 0 comments

Scamorama: Speaking of scams, you get all those Nigeria scam emails? ("My father, the late Nigerian Minister of Cat Food, left us $20m and we'll give you $2m if you help us...") What if you turned the tables on them and scammed the scammers?

A bunch of people are doing this. One counter-scammer pretended to be Princess Margaret and agreed to come to Nigeria, but only if she could bring her dog, two pump-action shotguns, a dozen hand grenades, and two Stinger missiles. Another fellow agreed to send money if the scammer converted to Judaism and allowed the circumcision to be done at the airport. ("It is a sometimes almost painless operation. You'll be walking after a few days!") Read a whole collection of these counter-scams. The Nigerians are so eager to steal money that they'll agree to anything, no matter how ridiculous.

Eve Edelson collected hundreds of these emails between scammers and counter-scammers and published them in an extremely funny book "Scamorama" ($15, 216 pages, illustrated.) 0 comments

A.J. Jacobs, an editor at Esquire, outsourced his personal life to a concierge in India. Very funny article. 0 comments

The city of Palo Alto recently sent me a coupon for five fluorescent light bulbs for ten cents each. Palo Alto has its own energy company, so if we can reduce demand, it helps. I picked up the new light bulbs and tried them out. I have bedside lamps on either side of my bed, so I tried it in one.

The light is identical. You can't tell it's fluorescent. The downside however is the slight high-pitched hum. It sounds like a mosquito. Luckily, I don't hear high frequencies very well, but most people and dogs in your bed will be annoyed. Use these bulbs where the hum doesn't matter.

On the upside, the fluorescent bulbs don't get hot. A bulb costs $2 and lasts years. If you switch all the lights in your house, you'll save $180 per year. Gov. Schwarzenegger is considering a ban on incandescent light bulbs within the next five years.

1 comments

The largest list (2,000+) of Web 2.0 companies, sorted by categories, at AllThingsWeb2.com

In general, Web 2.0 sites include: social tagging, user comments, user voting, sharing, communities, and mixed media (text, pixs, video, sound, etc.) The services are web-based (ID/PW login), often enabled for or targeted to PDAs and cellphones (SMS).

This is useful for getting an idea what these companies are doing, plus a sense of the look-and-feel.

I was at the Web 2.0 trade show in San Francisco two weeks ago. Clearly, many of these Web 2.0 companies are not sustainable business models (i.e., they won't make money). The only hope for them is to get a large user base and have Google/Yahoo/Microsoft to buy them. 0 comments