Web 2.0 Washes Ashore
By Steve Christ
When the Google guys set their sights on YouTube last year, the deal they cut for the social networking site rocked the Street. Sergey Brin and Larry Page's growing enterprise paid out a whopping $1.65 billion for the company.
To Sergey and Larry though, that was merely a drop in the bucket. Together they are worth over $28 billion, according to Forbes.com. That's good enough to land them the twelfth and thirteenth spots on the Forbes 400 list of the richest Americans.
But as big as the YouTube deal was, it was only the biggest of its kind. Other deals, while not as gigantic, were also impressive.
News Corp. struck first in July 2005, when it bought privately held Intermix Media for $580 million. The real target of the deal though was MySpace.com, Intermix's prime property.
Not to be outdone, Yahoo stepped up to the plate in April, when it paid $680 million for the portion of Right Media that it didn't already own. The deal made them the proud new owners of Flickr.com.
Those three deals added up to a price tag of well over $2.9 billion dollars.
That's not bad for a set of companies whose business models completely revolve around core products that they don't even produce. User-generated content and a strong brand name were all that was necessary to close each of the massive deals.
The big profits, each company hoped, would come later
But what these deals marked was just part of the new gold rush to stake claims in a new and growing territory known as Web 2.0. And it's an idea that has grabbed the full attention of the markets.
In fact, besides the massive dollar amounts thrown around in these deals, venture capital firms invested more than $844 million in 167 Web 2.0 companies in 2006, according to data compiled by Ernst & Young along with Dow Jones. That's a twofold increase over 2005.
When the Google guys set their sights on YouTube last year, the deal they cut for the social networking site rocked the Street. Sergey Brin and Larry Page's growing enterprise paid out a whopping $1.65 billion for the company.
To Sergey and Larry though, that was merely a drop in the bucket. Together they are worth over $28 billion, according to Forbes.com. That's good enough to land them the twelfth and thirteenth spots on the Forbes 400 list of the richest Americans.
But as big as the YouTube deal was, it was only the biggest of its kind. Other deals, while not as gigantic, were also impressive.
News Corp. struck first in July 2005, when it bought privately held Intermix Media for $580 million. The real target of the deal though was MySpace.com, Intermix's prime property.
Not to be outdone, Yahoo stepped up to the plate in April, when it paid $680 million for the portion of Right Media that it didn't already own. The deal made them the proud new owners of Flickr.com.
Those three deals added up to a price tag of well over $2.9 billion dollars.
That's not bad for a set of companies whose business models completely revolve around core products that they don't even produce. User-generated content and a strong brand name were all that was necessary to close each of the massive deals.
The big profits, each company hoped, would come later
But what these deals marked was just part of the new gold rush to stake claims in a new and growing territory known as Web 2.0. And it's an idea that has grabbed the full attention of the markets.
In fact, besides the massive dollar amounts thrown around in these deals, venture capital firms invested more than $844 million in 167 Web 2.0 companies in 2006, according to data compiled by Ernst & Young along with Dow Jones. That's a twofold increase over 2005.
So what are all of those dollars chasing in their pursuit of a piece of Web 2.0?
Simply put, it's the hope that the latest version of the net will finally fulfill the promise that Web 1.0 failed to deliver, namely an environment of richer content, more interactivity and better business models.
Whereas the original net was primarily a one-way affair with static pages, Web 2.0 engages its users in ways that the original version simply could not, thanks to technical innovations and the proliferation of broadband connections.
In short, though, what Web 2.0 is primarily about is you. Because in the end it represents the freedom to create, to express, and to contribute to the ongoing worldwide conversation. That's what makes it so powerful and potentially disruptive.
Take blogging, for example. It's Web 2.0 to the core. Sometimes called the "pajamas media," bloggers have beaten the mainstream media at their own game time and time again. Just ask Dan Rather.
Or better yet, consider the idea that Larry Sanger and Jimmy Wales brought to market in 2001. You've maybe never heard of these guys, but you have probably used what they helped to create.
It's called Wikipedia, and it's the work of over 75,000 active contributors. And it continues to grow thanks to user-generated content. At last count, Wiki had some 5.3 million entries in 100 languages, dramatically more than it had in May 2001 when only 1,900 articles made up it pages.
But while blogs and wikis are certainly as 2.0 as it gets, the category can be defined in a numbers of other ways.
According to Tim O'Reilly, who coined the term in 2003, Web 2.0 can refer to one or more of the following:
The transition of web sites from isolated information silos to sources of content and functionality.
A social phenomenon embracing an approach to generating and distributing Web content itself, characterized by open communication, freedom to share, and "the market as the conversation."
Enhanced organization and categorization of content, emphasizing links and tags.
A rise in the economic value of the Web, possibly surpassing the impact of the dot-com boom of the late 90s.
But to matter how you choose to define it, the Web 2.0 movement is well underway.
Just ask the guys who got that huge check from Larry and Sergey--if you can find them.
Simply put, it's the hope that the latest version of the net will finally fulfill the promise that Web 1.0 failed to deliver, namely an environment of richer content, more interactivity and better business models.
Whereas the original net was primarily a one-way affair with static pages, Web 2.0 engages its users in ways that the original version simply could not, thanks to technical innovations and the proliferation of broadband connections.
In short, though, what Web 2.0 is primarily about is you. Because in the end it represents the freedom to create, to express, and to contribute to the ongoing worldwide conversation. That's what makes it so powerful and potentially disruptive.
Take blogging, for example. It's Web 2.0 to the core. Sometimes called the "pajamas media," bloggers have beaten the mainstream media at their own game time and time again. Just ask Dan Rather.
Or better yet, consider the idea that Larry Sanger and Jimmy Wales brought to market in 2001. You've maybe never heard of these guys, but you have probably used what they helped to create.
It's called Wikipedia, and it's the work of over 75,000 active contributors. And it continues to grow thanks to user-generated content. At last count, Wiki had some 5.3 million entries in 100 languages, dramatically more than it had in May 2001 when only 1,900 articles made up it pages.
But while blogs and wikis are certainly as 2.0 as it gets, the category can be defined in a numbers of other ways.
According to Tim O'Reilly, who coined the term in 2003, Web 2.0 can refer to one or more of the following:
The transition of web sites from isolated information silos to sources of content and functionality.
A social phenomenon embracing an approach to generating and distributing Web content itself, characterized by open communication, freedom to share, and "the market as the conversation."
Enhanced organization and categorization of content, emphasizing links and tags.
A rise in the economic value of the Web, possibly surpassing the impact of the dot-com boom of the late 90s.
But to matter how you choose to define it, the Web 2.0 movement is well underway.
Just ask the guys who got that huge check from Larry and Sergey--if you can find them.
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