Tim O’Reilly redefines Web 2.0

Tim O’Reilly re-attempts to define Web 2.0 (link to full blog post):

Web 2.0 is the business revolution in the computer industry caused by the move to the internet as platform, and an attempt to understand the rules for success on that new platform. Chief among those rules is this: Build applications that harness network effects to get better the more people use them. (This is what I’ve elsewhere called “harnessing collective intelligence.”)

He continues:

Eric Schmidt has an even briefer formulation of this rule: “Don’t fight the internet.” That’s actually a wonderful way to think about it. Think deeply about the way the internet works, and build systems and applications that use it more richly, freed from the constraints of PC-era thinking, and you’re well on your way…

Other rules (which mostly fall out of this one) include:

– Don’t treat software as an artifact, but as a process of engagement with your users. (“The perpetual beta”)

– Open your data and services for re-use by others, and re-use the data and services of others whenever possible. (“Small pieces loosely joined”)

– Don’t think of applications that reside on either client or server, but build applications that reside in the space between devices. (“Software above the level of a single device”)

– Remember that in a network environment, open APIs and standard protocols win, but this doesn’t mean that the idea of competitive advantage goes away. (Clayton Christensen: “The law of conservation of attractive profits”)

– Chief among the future sources of lock in and competitive advantage will be data, whether through increasing returns from user-generated data (eBay, Amazon reviews, audioscrobbler info in last.fm, email/IM/phone traffic data as soon as someone who owns a lot of that data figures out that’s how to use it to enable social networking apps, GPS and other location data), through owning a namespace (Gracenote/CDDB, Network Solutions), or through proprietary file formats (Microsoft Office, iTunes). (“Data is the Intel Inside”)

(I’ll note that the process of getting advantage from data isn’t necessary a case of companies being “evil.” It’s a natural outcome of network effects applied to user contribution. Being first or best, you will attract the most users, and if your application truly harnesses network effects to get better the more people use it, you will eventually build barriers to entry based purely on the difficulty of building another such database from the ground up when there’s already so much value somewhere else. (This is why no one has yet succeeded in displacing eBay. Once someone is at critical mass, it’s really hard to get people to try something else, even if the software is better.) The question of “don’t be evil” will come up when it’s clear that someone who has amassed this kind of market position has to decide what to do with it, and whether or not they stay open at that point.)

“Defining” a business model transition is always hard. We had a “personal computer” era long before the business rules were clear. A deeper understanding of the new rules of business in the PC era, and a ruthless application of them before anyone else understood them as well, is what made Microsoft the king of the hill in that era.

A lot of what I’m trying to do with my thinking on Web 2.0 is to make the rules apparent to everyone, so that the industry isn’t blindsided. Perhaps a hopeless effort, but I’ve gotten some traction…

And later on in the comments section he boils it down to:

“Web 2.0 was the moment when we stopped using computers and started using the Internet.”

I think that this statement is very indicative and leads to a broader question…will Web 2.0 move the Internet closer to a system of collective intelligence? I think so…

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