Archive for December, 2007

10 Web Predictions for 2008

Monday, December 31st, 2007

In light of all the recent prediction posts for 2008, I present to you my list:

1. Google misses an earnings estimate; the stock drops a couple hundred bucks a share in one day.

2. An increasing number of mainstream musicians drop their record labels and sell directly online.

3. The term “web 2.0” is outlawed.

4. The “semantic web” and start-ups in the space continue to stumble.

5. Twitter is acquired.

6. Facebook continues to set the bar and dominate the social networking space.

7. Technorati continues to suck.

8. Open ID takes off; more sites embrace the standard.

9. Google launches a job site (or acquires one… SimplyHired? Indeed?).

10. Wikipedia gains widespread credibility and acceptance.

Bonus: 37signals is acquired (long shot).

What do you think will happen in 2008? Am I on target or way off?

Choose a Smaller Market

Thursday, December 20th, 2007

Choosing a target market for your product or service may not always be as simple as it seems. For example, creating a photo-sharing site for “anyone who takes photos” is a risky proposition. Difficulty targeting and high competition are two main downfalls of this approach. Having said that, the upside is a larger potential target group. Nevertheless, I’d recommend the former option as the chances for success are much more realistic. 

Trying to conquer a big market equates to a high risk-to-reward situation. Conversely, choosing a smaller subset usually leads to a lower risk-to-reward opportunity. A common misconception with the latter approach is that you may severely affecting your chances for success. In most cases however, such a tactic is not as risky as you may think (especially on the Internet). Niches are often still large groups.

Two advantages to niches include:

  1. Better opportunity for revenues
  2. Ability to create a stronger community

A quick example can be seen in the video-sharing space. A few start-ups (including ExpertVillage, Video Jug, Sclipo, and SuTree) chose NOT to compete against YouTube. A smart choice indeed. Instead, these video sites showcase “how-to” videos, a potentially lucrative niche. Obviously, users can upload and view “how-to” video on YouTube as well, but it is not their main focus. Staying small creates potential barriers, which can be good and bad. Also, as we can see from that small list, even niches are susceptible to competition.

Competing against the “big guy” in a given space is a long shot. The potential rewards may be handsome, but the likelihood of failure is also high. Place your bets and weigh your options carefully. Keep in mind that different industries may present different opportunities.

For more information on this topic, please read previous MappingTheWeb posts: Dethroning the Internet Giants and The Proliferation of Verticals.

Digging for a Deal

Tuesday, December 18th, 2007

Digg logoSocial news site Digg is up for sale. VentureBeat first reported the story, claiming a reliable source confirmed the company’s plans. The source goes on to say that Digg has hired Allen & Company, a private investment firm, to help broker a potential deal. The asking price is said to be in the range of $300 million.

The story really comes as no surprise to the blogosphere. Speculation about an acquisition has been swirling for months. The difference this time is that Digg is actively seeking an acquisitor, rather than fielding potential offers. This new tactic seems a bit desperate to me.

What is the company’s motivation to sell? Is traffic slowing down? Is Digg worried about the threat of new entrants and/or current competitors? Are revenues bleak at best? My guess is that Adelson and Rose figure the company is at its peak, both in terms of popularity and dominance. If that is the case, then Digg, in theory, should be able to negotiate the highest possible valuation. Having said that though, shopping around seems to put the acquisitor in a position of bargaining power.

I love Digg and I hope it sticks around for a long time. I also think it’s a great consumer-oriented, media play for any large company looking to make a mark in the space. What is currently happening behind the scenes is beyond me. But as I say, I think Adelson and Rose may be looking for a change. The world of venture capital may be awaiting. What about new start-ups? Oh yeah… then there’s Pownce

Google Search? Google Results.

Monday, December 17th, 2007

Google logoUnless you live under a rock, you are aware that Google launched “Knol” late last week. Immediate comparisons are being made to Wikipedia and Mahalo. However, a more accurate comparison can be made to Wikipedia co-founder Larry Sanger’s latest project, Citizendium, which focuses exclusively on the submissions of industry experts.

I’m not going to go into detail about the general concept (you can read this Mashable review if you’d like). Rather, I’d like to focus on the advantages and disadvantages of Knol. 

First off, the most apparent benefit of such system is the idea of a single, expert voice. This (in most cases) ensures that the article is not only credible, but also properly structured. Secondly, there is motivation for the publisher, both in terms of notoriety and monetary compensation. Lastly, community features, such as reviews, comments, and publisher profiles add credibility, authority, and validation to the entire system.

From a negative perspective, Knol articles are only presented from the point-of-view of one author. This means that bias and opinion are highly likely. Furthermore, there may also be conflicting information on a given topic from editor to editor. Finally, it may take extra time for a viewer to sort through all the articles on a given topic to locate the necessary information needed. 

Most important of all, Google results will start to appear in Google searches. This creates a huge conflict of interest, as well as head-to-head competition with SEO-dominant properties (i.e. Wikipedia, About.com, etc…). A little algorithm tweak here, a little tweak there… next thing you know, Knol pages are dominating the first page results. Now, I’m not saying this is going to happen, but it does pose a very lucrative opportunity for Google. If Knol pages are able to rank higher than Wikipedia pages, Google’s ad revenues will skyrocket. Nevertheless, I’m sure many will be keeping a very close watch on the entry of Knol pages into the search results…

For those interested, here is a screenshot courtesy of the official Google blog: Google Knol screenshot.

Web 2.0 Critics Are Partially Right

Thursday, December 13th, 2007

The blogosphere seems to have a distinct hatred for web 2.0 critics. These “anti-social media” crusaders, most notably Andrew Keen and Nicholas Carr, have a tendency to openly express their distaste for web 2.0. The naive and uninformed are quick to discredit their opinions and theories. However, the educated take an extra second to ponder their hypotheses with interest and intrigue… 

Let’s face it. Web 2.0 is an echo-chamber. You can use any cliche you’d like to describe it. “Drinking the Kool-Aid” and “preaching the choir” come to mind. At the end of the day, this group of idealistic web enthusiasts is often oblivious and ignorant to the downfalls of web 2.0.

The most commonly cited argument against web 2.0 is the notion of “mediocrity of the amateur”. This notion states that a small number of unique, knowledgeable voices is more powerful than a group of semi-knowledgeable, amateur voices. The most obvious example of this is the perpetual ‘encyclopedia vs. Wikipedia‘ debate.

The concept is more clearly defined in a popular Nicholas Carr post entitled, “The amorality of Web 2.0”. In his essay, Carr clearly outlines his arguments and criticisms of web 2.0. Some are hard to justify, while others are hard to accept. My favourite quote from the post, and one that has stuck with me, is the following:

“… free trumps quality all the time.”

It rings true all over the web. Nobody is willing to pay for anything anymore if there is a somewhat comparable offering available. As noted, this still stands true even if the substitute is of lesser quality. Cost will always edge out quality, especially on the web.

Now, I’m not siding with either party. I’d like to think of myself as an advocate of web 2.0, who is aware of its limitations and potential faults. Lack of an open mind is not only short-sighted, but may also be costly in the business world. I’m not stating that everyone should revolt against web 2.0. Rather, I’m saying that we should all be willing to take a step back and see things from an opposing perspective.