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?"
Wednesday, November 30, 2005
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12 comments:
But some APIs are offered for other reasons. The obvious example is Amazon: their APIs drive business to them and allow them to make money.
There's also the "charge for access" business model. EBay used that for a long time but has recently stopped charging (it never really made sense for them to change anyway). OTOH, Amazon has recently started charging for some of their webservices (eg, the Alexa Web Information Service which is now only free for 10,000 requests per month.
I think mashups using these APIs will continue.
The interesting thing is that the API that they are "mashed up" with - search - is something that is very easy to switch to a new provider for. Used up your Yahoo quota? Switch the the Google or MSN APIs, or pay for an API from Gigablast.
Hi, Nick. Why do you think Amazon's APIs drive a significant amount of revenue? I'm not sure there's any evidence of that.
I agree that these mashups will continue, but it will be as toy projects, not sizeable businesses.
Mashups may be cool and a lot of fun, but they aren't going to be the core of a Web 2.0 revolution.
web2.0 is people talking about web2.0.
so you greg are really are the quintessence of web2.0, since you talk about it at length.
there's plenty of mileage left. web2.0 isn't nearly as annoying as GTD weenies.
The Washington Post actually explicitly reserves the rights to reuse ideas generated by mashups of their feeds (Washingtonpost.com may incorporate your ideas into future projects it develops.)
Do you consider wikipedia and flickr to be Web 2.0 sites? They're certainly not mashups. Both create unique user generated content. I believe that's the more powerful side of Web 2.0.
Hi, Ed. Flickr and Wikipedia are pretty remarkable, yep. User-generated content is powerful, though spam and crap are big problems.
I agree that, if the Web 2.0 term is going to have any meaning, it needs to be defined as something more than mashups.
As I said earlier, I'd define Web 2.0 as this exciting period of rapid innovation following the dot-com crash.
But, maybe Joel and Dare are right that we should just set the bozo bit on the whole Web 2.0 meme.
I believe Amazon makes good money from its APIs based on (a) the number of affiliate sites around and (b) the number of people claiming to earn livings from Amazon commissions.
I've heard most individuals are getting less now than a couple of years ago, but I thought that was because of an increase in the number of affiliates (and hence API users).
If people are making thounds of dollars a month from Amazon Affilates/APIs then Amazon must be making even more.
I'm guessing you'd know better than me, though.
Thanks, Nick. I think that's true, but I think we're talking about different scales here.
Mashups can generate a few thousand a month for a clever hacker, but they aren't going to grow into a substantial business. They aren't at a scale that could be influential enough to create some kind of Web 2.0 revolution.
That's the problem. If Web 2.0 is nothing more than mashups, Web 2.0 is nothing.
I'd probably agree that most mashups are difficult to defend as sustainable businesses, but that could potentially change if:
- The API follows a standard that becomes ubiquitous
- There is enough competition to prevent onerous fees from being charged
- The API owner has a clear way to make money from providing the API, and therefore is les likely to become competition
More here and here...
"Mashups can generate a few thousand a month for a clever hacker, but they aren't going to grow into a substantial business."
Well that's true, but take a few thousand hackers making a few thousand a month and soon it starts to add up to some serious volume for the API vendor.
If there are 2000 hackers making $2000 a month at 7% compensation then that is roughly $60 million turned over for Amazon. Not huge, but not an insignificant amount either.
Another way mashups can work is when they are not the focal point of an application. Streampad has many mashups which enhance the service, but the main point is to access your music from anywhere. If any of the mashed services disappeared, it would not kill Streampad.
Mashups alone is not what Web 2.0 is about. Web 2.0 is more about social networking, rich user interfaces, user generated content, new methods of sharing and integrating data.
Mashups have actually existed for years, the only thing new is just the name. For example, a simple phpnuke site which uses google api search and gets weather from weather.com's api is technically a mashup.While not a glamorous example, sites like that have existed for many years already, so I could hardly say Web 2.0 is all about mashups.
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