Learn to Adapt

Today I had the great pleasure of presenting a session on Web 2.0 and Enterprise 2.0 at MIX08 Italy in Milan. I was there as a guest of our strategic partner in Italy and Germany, Reply. The day was kicked off with a keynote by Microsofy CEO, Steve Ballmer (see videos here). There are other posts about his comments on Yahoo! So I thought I would just share some of my thoughts on the other parts of his talk (and the follow-up Q&A).

Content + Community + Commerce was the mantra for the talk. This seems to be there way of recognizing that software is not the main driver in IT any longer. Now it is all about getting people what they want (content) in a social experience of their choosing (community) and, of course figuring out how to monetize that (commerce) so you can stay in business. The one thing that struck me from the talk was that the only monetization model he talked about was advertising. While I’m sure they are considering service subscription models as well, he didn’t mention it. During Q&A the theme came up again when he said the reason they were after Yahoo! was that they were a advertising and marketing platform that was already at “critical mass.”

Software + Services is the solutions theme for Microsoft. This is there take on how they will help us serve the C+C+C from above. Despite Ray Ozzie’s release of Live Mesh and some observations that MS finally sees that software is dead, Steve stressed the continued importance of software. He described how software will evolve in an environment that wisely balances desktop, Web, enterprise, and devices. Seems to me the “software vs. services” debate is semantic posturing. In either case we will still need engineers writing code that moves bits.

“Consumer, consumers, consumers.” That quote and his discussion of consumers was the only part Steve’s talk that made me cringe and think they still don’t get it. In this day and age, no business should look at their users/customers as consumers. I agree with Matt Jones’s definition of consumers. The people who use our products are our partners, not mindless consumers. Empowering people to partner with us to make our products better is at the heart of Web 2.0. If Microsoft does not get this, they are going to have a tough row to hoe.

Looking foward five years. Finally, perhaps the most animated and interesting part of his talk were his visions of the future of computing. They really were about services (supported by software) that reflected the pending convergence in media and technology. To paraphrase badly, he told a brief story envisioning a future when he is golf watching “TV” and shouts “Hey Bill, did you see Tiger sink that putt”. His intelligent “TV” would recognize that Steve wanted to say that to Bill Gates and would instantly find if Bill Gates was available for Steve. Bill’s “cell phone” would let Bill (sitting on a beach somewhere) know that there was a message from Steve and play the audio of Steve’s comment as well as the video of Tiger’s putt. Steve would respond, “that was nice – what kind of ball is he using?” Steve would rewind the video, zoom in on the ball, click it and get instant information about it and a link to buy it. He would tell Bill the brand and order two boxes for them. This was just one example of his crystal ball gazing - he also discussed ePaper and projectable surfaces.

Overall, his talk was interesting but didn’t break any new earth. But it did make me wear a tie. I try to avoid wearing a tie like I try to avoid root canal surgery. When I asked my Reply hosts if a tie was required for my presentation, the response was something along the lines of, “we know Americans don’t really wear ties - let’s wait and see what Steve does…” So, I was counting on Steve to go tieless. Wisely, he chose to show respect for the host culture and he wore a tie. So, I followed suite.  The most difficult part of the whole day was remembering how to tie my tie…

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Just a quick note:  If you will be in Milan on March 23, drop by the Crowne Plaza Hotel for MIX08 Italy.  Steve Ballmer and his Microsoft crew will be giving the Microsoft spin on what is hot in Internet development in the morning.  I will be joining a host of colleagues from our Italian partner company, Reply, for additional presentations on delivering Web 2.0 and Enterprise 2.0 solutions in Italy in the afternoon.  So, if you decide that Milan sounds like more fun than another year of Web 2.0 Expo in San Fran, drop on by!

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This week I have been in Milan delivering train-the-trainer for our Web 2.0 University™ (W2U) partners at Reply. Reply has license to exclusively deliver the Web 2.0 Executive Bootcamp, Enterprise 2.0 Bootcamp, and Ajax Bootcamp in Italy and Germany. It has been an exciting week working with the dedicated and experienced folks at Reply to localize our learning content for their target audiences.

During the training we discussed how many of the Web 2.0 ideals and applications play out differently in Italy and Germany. From the legal restraints that make music sites like Pandora impossible to the generally more conservative attitude toward social applications, Reply is customizing the W2U content to deliver outstanding learning to their clients. They have become quite Web 2.0 savvy and I’m sure they will do a great job leading the 2.0 revolution in Europe. So, if you want to leverage the competitive advantage of Web 2.0 or Enterprise 2.0 in Italy or Germany, visit the Reply W2U site.

Unlike most trips abroad, I took some extra time to enjoy Milan. Friday evening I had the great pleasure of being treated to dinner by Piero Rivizzigno, the CEO of the soon to be released, Glossom.com. (This social website will focus on design and fashion – link to come soon where you can learn all about it.) Piero took me into the city center for the best fresh mozzarella I have ever had as well as traditional Naples pizza that was fantastic. Piero mentioned that the owner of the Buffalo Ristorante (I think that was the name - confirmation to come) is hoping to open a restaurant in Georgetown in DC. That would be a wonderful development! Piero was a great host and our discussion of the future of social applications was illuminating. We discussed data portability and Piero was spot-on in his observation that website-owners who benefit from the content we provide need to do a better job of sharing their revenue (at least a small portion) with us.

Saturday I got to play tourist in full glory and traipsed all over Milan city center. I visited the Parco Palestro, the Castle of Milan, and the Milan Duomo and the Galleria Vittorio Emanuele II. Sadly, the battery on my camera bit the dust at the Duomo, but here are a few pictures:

The Palestro in the Parco Palestro…

The drawbridge at the southern “Little Bridge” entrance to the Castle of Milan:

Inside the Caste of Milan (or as it should be called – the castle of cats – they owned the moat):

Approaching the Duomo Church (both inside and out, it is simply magnificent):

My personal favorite: A beautiful fountain fighting the unbelievable moss that it swallowing it with the Duomo behind:

Now it is on to the butt-busting flight from Milan to Frankfurt to DC and back to my family (hopefully my son will look up long enough from Adventure Quest to notice I’m home ;o).

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Here is a simple illustration I put together for a client that displays the six primary monetization methods on the Web. Is is a simplification and expansion on a post from Dion Hinchcliffe from awhile back. The only real “Web 2.0″ advances in monetization lurk in the “back door” that was opened up using APIs. Recently, Larry Dignan reiterated a common refrain that APIs are the future of Web monetization based on very rough numbers of how much Amazon makes from its numerous Web Services (additional interesting point here). While the numbers are not yet firm they are the only new monetization method that has arisen with Web 2.0. The illustration shows the monetization methods from the traditional “front door” of a Website as well the new opportunities opened up by APIs (all presented simply enough for even the busiest executive):

And here is a very brief summary of the six methods:

Advertising: The Web site owner sells spots on the website (“inventory”) to advertisers. There are numerous models for this type of monetization. Some are fixed price, some are per displays (“impressions”), other are based on the visitor clicking or taking some other action from the add link. Example: AOL sells premium ad banner locations for up to $500K per day.

Subscriptions: The Web site owner only makes some or all of the content or functionality available to customers who create an account and use a credit card (or other means) to subscribe to use the content or services. Rhapsody.com charges users $10/month to be able to listen to millions of songs from thousand of artists anytime, anywhere (online – additional charge to download a song).

Retail: The Web site sells products or services directly to the site visitor. This is a single transaction as opposed to an ongoing subscription. Example: iTunes makes it money be selling individual songs for download.

Donations: The Web site allows people who find the site’s content or services useful to donate money to keep the service functional. Example: RadioParadise.com is a user-supported online radio station that generates all its revenue from listener donations.

Fees: This is a B2B charge where the Web site makes some or all of its content or services available to other businesses for a fixed fee. Example: Amazon.com opened many of its online merchant functionality to other companies and generated an additional $250M in revenue in 2005.

Commissions: This is a B2B charge where the Web site makes some or all of its content or services available to other businesses and collects a percentage of the other business’ resulting revenue. Example: Google AdSense allows everyone to put Google text ads on their website and get a percentage of the money Google makes from the advertising.

And that is a wrap of the original document. But…

Coming Soon: Web 2.0 Show Me The Money (Part 2) - wherein I revisit the illustration and update it based on recent developments and the great monetization summary article from Professor Michael Rappa. (I will try to get part two up in the next 30 days!). In the meantime, please leave comments especially if you can point out everything I missed!

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