Algorithm Wins All? Competition and Success in Web 2.0
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Written By Kate Zimmermann | January 29, 2007 | Share This
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Brad Burnham from Union Square Ventures has a written a very insightful post on “What’s Next” for internet technology. He’s articulated some of my own thoughts about the direction of online services and how economies of abundance develop,
“The web services that seem to explode onto the scene like Facebook and YouTube did not get there by providing exceptional reliability, accessibility or security. In fact many have suffered outages that would have killed other service providers. These services succeeded because they effectively gather and use data. They are differentiated not by the quality of their service but by its nature. Competitors can offer much better service levels but without access to the same data, they can not offer the same utility.”
“The genius of Craigslist is in its governance system…that allows 21 people to administer 300 sites in 35 countries. I believe that the basis of competition in web services will shift from the data to the system that manages the acquisition, and use of that data.”
This is especially well exemplified by the emerging online music industry. Last.fm uses behavioral data to make their recommendation engine perpetually more relevant to individual users. Sellaband is an independent music label funded and promoted virally by community members who in turn profit from the company’s success. AmieStreet, similarly, uses popularity to set purchase prices for music downloads. Each of these companies has found a way to profit from their innovative systems of governing community-generated data.
Perhaps, however, the Onion says it best.
Topics: ECommerce, Open Source, People on the Move, Social Media, Technology |