Glenn Fleishmann was on NPR's The Works yesterday talking about Web 2.0. Glenn defined Web 2.0 as mashups, accessing and combining web APIs. Mashups and nothing but mashups.
When asked about business models for these mashups, Glenn talked about how they could start small with low costs, but said nothing about they might generate revenue or how far they can grow.
Similarly, I talked to Rael Dornfest a couple weeks ago. He also made it clear that he thought mashups are the next big thing.
When I asked Rael about some basic problems with mashups as a business (no service guarantees, limits on the queries of APIs, limits on commercial use of the APIs, numbingly slow, no barriers to entry), he had no answer.
I keep hearing people talk about as if companies are creating web services because they just dream of setting all their data free. Sorry, folks, that isn't the reason.
Companies offer web services to get free ideas, exploit free R&D, and discover promising talent. That's why the APIs are crippled with restrictions like no more than N hits a day, no commercial use, and no uptime or quality guarantees. They offer the APIs so people can build clever toys, the best of which the company will grab -- thank you very much -- and develop further on their own.
There is no business model for mashups. If Web 2.0 really is just mashups, this is going to be one short revolution.
See also my previous post, "Can Web 2.0 mashups be startups?"
Update: Richard MacManus has some good thoughts on this in his post, "Mashups: who's really in control?"