The buzz and hype of the new web landscape has subsided considerably. Yet, to my surprise, more and more ‘web 2.0’ start-ups continue to operate with the cheesiest, most over-used strategies.
- “We’re currently in stealth mode.”
- “Our AJAX widget will VOIP the RSS while podcasting to bloggers in a wiki-like fashion.”
- Our target market is anyone who uses the Internet.”
These crack me up. Like… give us all a break. My favourite though… is one that is not as apparent, or even stated anywhere. It pertains to the revenue models of these ventures. Contrary to what many may think (especially the companies themselves), a revenue model was never part of the initial strategy.
To some, this may come as surprising. To others, it’s common knowledge. Many of these start-ups launch a FREE product with the intention of exploding onto the market, harnessing viral growth, and eventually selling to a larger, more established player. WOW, there is it. The revenue model is actually an exit strategy. I think that is a web 2.0 trend in itself.
Web 2.0 revenue model = Exit strategy
This makes sense for naive Internet entrepreneurs because:
- It eliminates that monetary barrier to entry for users (as mentioned above)
- They have no idea how to monetize a product in the first place AND/OR they find comfort in the the phrase, “We’ll build traffic, then figure out how to monetize later”.
- The company realizes that if they do eventually implement a revenue model (advertising, subscription, etc…), they will piss off users and many will defect from the site or service.
So, as you can see, companies resort to the FREE model with the intention of ‘slapping on’ a revenue model somewhere down the road. There never was a revenue model to begin with.
Now, don’t get me wrong… I love free products and don’t want to pay for anything if I don’t have to. But from a business perspective, that is not a sustainable or savvy model.