Is Web 2.0 rewarding poor quality?
By Jason Menayan September 23rd, 2008
Alan Patrick at Broadstuff has an interesting take on Tim O’Reilly’s sobering keynote speech at Web 2.0 NY last week. Tim O’Reilly warned that applications that focused on capricious novelty, like throwing sheep using SuperPoke on Facebook, or iBeer on the iPhone, are taking away the brainpower that could be solving mankind’s problems, like global warming and financial market meltdowns. A serious splash of cold water, ironically from the man widely credited with coining the term “Web 2.0″.
Alan’s inference was that Web 2.0 as it stands now can not support themselves through advertising alone: the pie just isn’t big enough for serious companies in the Web 2.0 space to carve out huge valuations for themselves when the behemoths, like Google, Msft, Yahoo and AOL, have garnered most of the ad spend.
He goes on to argue that poor quality content is a natural consequence of an everything-is-free market, which doesn’t reward high quality. This, of course, goes against Chris Anderson’s thesis, explored in depth in Wired in February (and one that he’s developing into a book, Free), that an advertising-based model is the future.
I disagree with Alan (and Tim) on a few points:
- some of the sillier apps, like iBeer, are the fruit of developers testing the app markets. One dubious success can give an entrepreneur the cash, connections and confidence to pursue greater aims. Remember that one of Jimmy Wales’s first contributions to the world of online media was Bomis.
- Google et. al. do eat up a big portion of the pie, but they are supporting ad income for a wide swathe of Web 2.0 sites (Digg is supported by Microsoft ad revenue; HubPages, in large part, by Google, to provide just a couple of examples).
- By almost all measures, the online ad pie continues to grow, despite overall ad spend shrinkage as economies tighten worldwide. This is because the wider move from offline to online in users’ habits outweighs ad budget contractions.
It’s not hard to feel Tim O’Reilly’s frustration. There are thousands of brilliant programmers whose genius isn’t readily apparent when we use one of their disposable, forgettable apps, and we do face considerable challenges that need some of the best minds to work on them. But I would argue that silly novelties are just one part of a greater phenomenon, in which people grow familiar with and appreciate technology enough to reward those who create it, and that greater trend is something worth feeling optimistic about.
This entry was posted on Tuesday, September 23rd, 2008 at 4:56 pm and is filed under Online Advertising. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
September 23rd, 2008 at 5:25 pm
Good rebut of my thoughts – I buy your point 1, and in but point 2 you are partially right, but you can look at Google’s financials and see that they take the lion’s share.
Point 3 is true, but not enough to make a difference next 1-2 years, which is my core argument – and I suspect it will decline or at least fail to grow as fast as forecast following the last few weeks.
As to quality, that thesis ain’t mine, its much older than me
. Many economists have noted that in markets where you can’t extraxt premiums for quality the low cost goods drive out higher cost but better quality ones.
September 24th, 2008 at 10:01 am
Thanks, Alan!
I’m wondering, to your final point, though, if niche ad networks, which have considerably higher standards for quality than do networks like AdSense and YPN, but also command much higher CPMs, provides an incentive for publishers to produce quality content.