I can’t take it anymore – I just can’t.
The idea that you can create a “cool” service, attract massive numbers of subscribers, and then monetize the subscriber base is insane. Always was, always will be. But it is the Google model. They created a web search service (cool) and then once they became a powerful player in web search they became an ad platform (monetization) – right?
That however, is a myth. The reality is Google was solving a real, important problem. The web was growing really fast. Creating a way for people to find the content they were looking for was a known problem with existing solutions (remember Yahoo and Excite were already out there). The existing solutions were already generating revenue – by placing adds in their content (remember the whole aggregating eyeballs thing?). What Google did was create a better search solution (product innovation) and refine the exiting business model from ad placement (putting ads on your blog) to becoming an ad platform (business model innovation).
So the reality of Google is that they solved an important problem via product innovation and solved an important problem via business model innovation – by creating an advertising platform which could be leveraged by any advertiser.
But the myth is so much more fun – couple of guys create a really cool way to index the web for relevance and everyone wants to use it. Now they can figure out how to make money. We all took the bait. The Bubble 2.0 story became “create a cool service, generate buzzz, aggregate tons of users, and then generate revenue”.
Here is the bad news – that is the same myth that created Bubble 1.0 – remember? Bubble 1.0 said – “Don’t worry about revenues – just grow really, really fast – once you have lots of growth revenue and profits will come.”
As Britney Spears would say “oooops, I did it again“.
What is real is that the winners solve important problems that have enough value that people will pay for them. Finding a business online (Google) – huge problem, great solution = $$$. Selling stuff I don’t want/need to someone, anywhere who does want/need it for as much as possible (eBay) – huge problem, great solution = $$$.
So let’s make a deal. Let’s stop talking about “cool” services, how fast they are generating page views or subscriber growth or any other measure until they tell us how they are going to make money. Let’s get back to creating services that generate value for the prospective customer – value that they are willing to pay for (again – ad placement is just a way of getting your user to pay for the service).
It isn’t important that the first business model is the “right” business model. What is important is that we are re-focusing all of our frenetic energy on what really matters.
VALUE = REVENUE