Online Business models

Online business models are to me one of the most interesting subjects on the web. Models are always changing, and it changes the web. Keeping moving with those changes can be very difficult, as Odeo are finding out. People are always using terms to justify new changes online. The most popular at the moment is web 2.0 That overused, little meaning term for me sum's up the teenage years of the subscription model. Online services have cropped up that are taking simpler tasks online. These are sometimes termed 'web products'. Recently the subscription model has been used to turn these products into high earning businesses. One such product that was there before the subscription model really took off was Blogger. A very scalable system where anyone can sign up and start their own blog. How did it make money? For co-founder Evan Williams it was advertising until he struck gold and they where bought by Google. The big machine eating up smaller smart companies is not a new thing only it used to be Microsoft, a few monopolies commission investigations lead to them re-evaluating their stance and setting up a very strong partner system instead. They still buy companies out of course, but they are a lot smarter these days. At the moment though, one of the main goals for a smart bright young company is to get noticed by Google and get bought out. The founder of Blogger Evan Williams worked for Google for a while, but then left in 2003 to form the pod-casting site odeo. I listened to his lecture at Stanford nearly a year ago and thought a lot of him. Well Odeo got bloated, lost direction. Evan says it himself, even going against the words in his own book “Ten Rules for Web Startups”: “ 'Be Narrow, Be Tiny', I was working on Odeo at the time I wrote that, and I was ignoring most of those rules.” You cant deny that Evan has more experience than most and even though Odeo has made mistakes, he is still ticking and so is Odeo. Evan has now set up a new firm to manage his 'web products', its called 'obvious corp' and they believe they are going to make the plates of the profitable web shift again: "We are attempting to create a new model for building and running web products. Nearly everyone I know in the Internet business is either at one of the giants, wishing they were at a startup, or at a startup that hopes get bought by a giant. The models for how these types of companies build and launch products is fairly well-known—although some certainly do it better than others. My theory is that a confluence of factors are paving the way for a different type of company:"
  • Sites are cheaper and faster to build
  • The consumer web is increasingly hits-driven and increasingly crowded, which makes it more difficult to predict what's going to work.
  • Sites that do get attention can make money with advertising and/or subscriptions.
The Obvious model goes something like this:
  • Build things cheaply and rapidly by keeping teams small and self-organized.
  • Leverage technology, know-how, and infrastructure across products (but brand them separately, so they're focused and easy to understand)
  • Use the aggregate attention and user base of the network to gain traction for new services faster than they could gain awareness independently
It will be interesting to see what the next shift will be, while we are waiting why not check out Obvious