Friday, 9 May 2008

R.I.P advertising: Business models on the Web

Rory Cellan-Jones, BBC News technology guru and blogger at BBC, posted some interesting musings about Firefox 3 yesterday. Mozilla Firefox 3 is due for final release in June 2008. One controversial development, however, is the 'awesome bar' - controversial owing to the manner in which it gathers data on user searching behaviour...

Seemingly – and probably unsurprisingly if one gives it a second thought – the Mozilla Foundation have struggled to keep their head above water. How does the "poster-child of the open-source movement" keep a staff of 160? Until fairly recently the majority of revenue was generated from Mozilla branded merchandise. Incredible that the browser you are probably using to read this blog was created by a bunch of people selling T-shirts to keep their passion afloat. As Google have demonstrated, the true Web money is in information retrieval and intelligent advertising. To this end Yahoo! is attempting to rejuvenate itself in the face of Microsoft by (hopefully) revolutionising information retrieval through leveraging structured data (e.g. metadata, Semantic Web data, microformats, etc.) – because that is the honey pot. For Mozilla, the Firefox awesome bar is set to supplement revenue generated by the default Firefox Google search box. But as Raju Vegesna acknowledges, "People are realising that advertising is not good for everything, that it's not going to make them the next Google". This is simply because not enough people look at adverts.

But this post is a general musing on Web business models. Sure - open-source is about user emancipation. And those innovative enough (i.e. Mozilla) will find good revenue generating tools, ultimately based on advertising. But what about Web journalism, or Web 2.0 services? How are they going to put dinner on the table in 3-4 years time? Has our unbounded enthusiasm to provide everything for free during the mid to late 1990s created a business model nightmare today? Have we passed the point of no return?

These aren't new questions, but they are questions we continue to agonise over. While the Future of Journalism conference attendees do a little more agonising, the pioneers of Web 2.0 engage in their own head scratching. As we learned a few weeks ago, Bubble 2.0 might burst soon; many are finding advertising difficult and some openly acknowledge that a robust business model was a secondary concern for their Web 2.0 enterprise. Others are resorting to subscription to pay the bills. Is it time to acknowledge that – except for the few (i.e. Google et al.) – advertising, as the basis for an e-business model, is finally dying?