Chapter 1: Users Create Value
Web 2.0: A Strategy Guide
Amy Shuen

You don’t have to be a genius in order to understand that the more customers a company or business has, the more profitable it will be. Web 2.0 technologies hold true to that theory but also give it a slightly new meaning. Exchange customers with the more tech-savvy word: users, and replace profitable with valuable. The more users a Web 2.0 company or business has, the more valuable it will be.

Web surfers now have almost no limitations to what they can search for and read as well as the different activities they can perform, edit, and interact with. The first chapter of Web 2.0: A Strategy Guide explains the business model of the Web 2.0 photo-sharing site, Flickr.

Flickr gives users the technology to upload, categorize, tag, edit, and share their digital photography. Users can choose to share their photos with the public or make them private where only certain users in the network can view them. “By 2006, Flickr’s platform allowed more than 2 million registered users to become active uploaders of more than 100 million photos.” Of these photos, around 80% were publicly shared.

The large number of users created an increase in value for the site. Many users have upgraded from the free account to the Pro Account, $24.95 per year, which gave them “unlimited storage, full-resolution images, and no advertising.”

Advertising also brings in revenue to Flickr. Users can “benefit from free products and services” while Flickr uses “contextual advertising” that monitors the rapid-growing of its users and turns “clicks into dollars.”

Using formulas to determine a user’s “lifetime customer value,” Web 2.0 technologies and websites have found ways to create value from each user account. Even non-paying users create value for Flickr and other Web 2.0s. The two million users of Flickr averaged a “$20 per user revenue over the next three to five years” when it was purchased by Yahoo! for $30-40 million in 2005.

The larger the customer base, the better the profit. The bigger the social network, the more valuable the website. Between subscription services, advertising, and revenue sharing, Flickr’s revenue model prominently depends on a large user base.


How to Use Your Users

Web 2.0 for Designers
By Richard MacManus and Joshua Porter

http://www.digital-web.com/articles/web_2_for_designers/

Web designers have been known to spend hours on end creating and crafting the perfect web site. Whether they choose to create a static site with an artistic layout or a gaudy animated site made with Java Script, it was the designer’s job to make the site appealing and attractive to the users rather than implement the needed content. Web 2.0 has almost completely changed the responsibility of designers.

No longer are they worried about dressing up sites with animations, fancy colors, and unique arrangements. “The Web of documents has morphed into a Web of data. We are no longer just looking to the same old sources for information. Now we’re looking to a new set of tools to aggregate and remix microcontent in new and useful ways.” Web designers now have to be focused on creating useful tools that collect and harness the extreme amount of content found on the web today.

The markup languages of HTML and XHTML are slowly becoming obsolete. Though designers can still use them, a new technology known as XML better reveals the method of semantic markup. The most popular XML format is Really Simple Syndication. RSS, as its name implies, is a very simple way for users to receive updates and new data from popular and frequented websites. “So, instead of browsing to your favorite site over and over again to see if something is new, you can simply subscribe to its RSS feed by typing the RSS URI into a feed aggregator.” Because of the ease of checking for updates, this bypasses the need for users to visit the actual source/URL where the information originates, making those long hours of designing flashy website useless. “XML is the currency of choice in Web 2.0, so words and semantics are more important than presentation and layout.”

Web 2.0 is the future of the internet and is changing the future for designers. They must now worry less about the “design” and more about the content. They “have to start thinking about how to brand content” and “get comfortable with Web services and think beyond presentation of place.” It seems as though designers are almost required to stray away from what they know best. Though they do need to update their technical skills and knowledge of the web as a platform, they must also find a way to blend their creativity with the Web 2.0 world.

25 Examples of Web 2.0 and Traditional Design Rules Coming Together

http://www.webdesignerdepot.com/2009/09/25-examples-of-web-2-0-and-traditional-design-rules-coming-together/

What is Web 2.0?
Tim O'Reilly
http://oreilly.com/pub/a/web2/archive/what-is-web-20.html?page=1

In this day and time when it doesn’t seem like there could possibly be any newer technology and ways of communication, throw in the concept of Web 2.0. Most people, like myself (until after reading the article), either have never heard of such a concept or didn’t realize there were any major differences in the web now compared to past years. Web 2.0 uses the internet as a platform and provides services on the web as opposed to static web pages and product applications.

There are certain requirements and competencies for a website to proclaim itself as Web 2.0. The one with the most significance seems to be the “services, not packaged software, with cost-effective scalability” competency. “One of the defining characteristics of internet era software is that it is delivered as a service, not as a product.” A very interesting battle could ensue from the up rise of Web 2.0 technologies. Web 2.0 versus the all-mighty, software powerhouse known as Microsoft.

Unless Microsoft plans to reroute its future into internet era software, Web 2.0 applications, Google especially, will cause a company downfall in due time. O’Reilly quotes an editorial from ZDnet which “concluded that Microsoft won’t be able to beat Google: ‘Microsoft's business model depends on everyone upgrading their computing environment every two to three years. Google's depends on everyone exploring what's new in their computing environment every day.’”

At the rapid rate Web 2.0 is growing, it is only a matter of time before all software companies, not only Microsoft, will have to rethink their business plans. If not done very soon, it may be too late to prepare for this “switch” to web applications. “We expect to see many new web applications over the next few years, both truly novel applications, and rich web reimplementations of PC applications.”

Users are sure to become familiar with Web 2.0, considering if they use any of the applications, they are considered as co-developers. Once the rest of the internet world catches on and realizes they can create documents, slide show presentations, and spreadsheets (via GoogleDocs) without having to purchase hundreds of dollars worth of software on compact discs, software companies will have no other choice but to reform.



Microsoft CEO Steve Ballmer to Address Web 2.0 and the Future of the Internet.
http://www.microsoft.com/presspass/press/2007/oct07/10-18Web2dot0PR.mspx