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Don't Worry, It's Not Socialism
We're starting to see the emergence of new economies in the Internet in which the exchange of money isn't the straightforward path from customer to merchant that we're all used to. This has led to some alarmed hand-wringing about socialism, when in fact what we're seeing is the good ol' free market at work in strange and new ways. Leading the way in this trend: Teen-agers on sites like MySpace and Facebook, people posting silly pet videos on YouTube, as well a the legions of geeks who create and contribute to open source software. Nicholas Carr kicks off the discussion, noting that Web traffic is concentrating on a few mega-sites, including MySpace and Facebook, which together account for 17% of all Web traffic in November.
I'm uncomfortable with the phrase "attention economy"--it looks like a pseudo-scientific buzzword to me, like "meme." And, besides, what sites like Facebook and MySpace are selling isn't attention. Just putting up a page on those sites isn't necessarily going to bring viewers and their attention. Ed Felten is more precise. These sites offer Web hosting, as well as software and services to package up and present content. If you're a commercial site (like InformationWeek), you pay a lot of money for those services. You can go to a site like TypePad and pay a little for those services. Or you can get it for free from Web 2.0 companies, like MySpace and Facebook. Felten concludes with the following, intriguing point:
The traditional way capitalism works is that the merchant provides a product or service, which the customer pays for. But Web 2.0 and open source products operate differently. In the case of Web 2.0, usually no money changes hands between user and merchant. So the merchant has to find new ways to make money. One of those "new" ways is actually centuries old: Advertising. The user uses the Web 2.0 merchant's services to post their content to the Web, and the merchant then turns around and sells ads based on that content. If everything is going right, then everybody wins -- the user gets to publish his content, and the merchant makes money by selling ads. Some companies get fancier. Spurl.net, a social bookmarking service, mines information about the bookmarks its users generate. NewsGator primarily makes its money providing RSS services to companies. They also make an excellent Web-based feed reader which anyone can use for free. I asked them a while ago how they can afford to do this -- they said they also license the feed-reader to businesses, and the free version provides them with valuable user input that helps them refine the paying product. « Nature's Failure Shows Limits Of User-Generated Content | Main | And A New VM For Mom » |
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