Here is a quote from Oreilly, ” Web 2.0 is an attitude, not a technology”. This speaks all about the idea behind web 2.0 ventures. Let us first of all try to look at different web 2.0 ventures that are available in the market today. Some of them are based on – Social Networking, Social Bookmarking, Rich Interactive media, Blogging, Podcast etc. Major crux of web 2.0 websites are that it is community oriented. The main reason for success of web 2.0 sites has been that it has empowered users to express themselves. It is an innate behavior in human beings to showcase their ideas, thoughts and concepts to everyone. Web 2.0 sites have made maximum utilization of this need in everyone, and hence explains the success. Any and every business can be a success if it can satisfy some deep human urge and need.
We have heard so much hullabaloo about these web 2.0 websites. But are these ventures really profitable. Let me tell you, if it was not profitable, then thousands of Venture Capitalists in the world would not have had invested so heavily in these ventures. To reiterate my point of view, you can Click Here to view the list of all the web 2.0 companies who have received venture funding so far. Believe me, VCs invest because they want their money back, and in manifold times as well. The point is that we need to understand that the source of revenue in web 2.0 ventures do not come in the conventional way. The highlight of these sites are that most of the features are provided free of cost to the end users. Very few websites charge their users for making use of the features, and those who are charging their members have had limited success.
The goal for every web 2.0 ventures entrepreneurs should be to increase the member base as much as possible. Once the website has a huge number of membership, the remaining things are automatically taken care of. There are many ways of increasing the membership in these kind of websites – we can take that up in a different article. One mistake, though often it is taken as a well planned strategy, that web 2.0 ventures try to address a limited group. Targeting a niche audience is fine, but we should not forget that business can be successful only when we have scalability inherent in its business model. So my suggestion to all would be web 2.0 entrepreneurs will be to target a niche audience, but not to limit themselves.
There are basically 3 source of revenue for web 2.0 ventures: Selling advertising, Paid user subscriptions, Getting acquired. Paid User subscriptions is a good option to attract revenue, but there is a word of caution here – Do not make basic features as paid features. The members will turn away from your side, if you do that. Anybody and everybody likes free meal. Besides, if people can get some free features elsewhere, they will go for it and never return to your website. Paid members should be provided real value added services. Selling advertisements on web 2.0 websites is the most important source of revenue. Advertisement, positioned intelligently on the website can be huge revenue earner for the site. But care should be taken to monetize the site in a way, so that it does not interfere with the regular feature usage. Getting acquired is the long term option. Thousands of members can lead to valuation of millions. Usually this is what most of the web 2.0 venture gun for.
So to conclude, I will say, definitely there is money in web 2.0. Its the way the site is operated and marketed, that makes the difference, eventually.