Tim O’Reilly Interview, Part 2: Business Models & RSS

first_img8 Best WordPress Hosting Solutions on the Market Related Posts A Web Developer’s New Best Friend is the AI Wai… Tags:#Interviews#web Why Tech Companies Need Simpler Terms of Servic…center_img Top Reasons to Go With Managed WordPress Hosting richard macmanus This is the second in a 3-part interview with O’Reilly Media CEO, Tim O’Reilly. In part 2, we discuss business models for Web 2.0 and the future of RSS.Business Models for Web ContentRichard: There’s been a bit of discussion amongst bloggers recently aboutmonetizing weblogs – making money off one’s Web content. This of course has long been adream for Website producers – content is king, but how to make money from it? Mostcommercial publishing businesses have used subscription models to do that, including yourcompany (e.g. Safari Bookshelf). But withbloggers and other independent content creators, perhaps advertising and sponsorships arebetter avenues for them to explore. Where do you see the future of Web 2.0 for contentcreators, in terms of making money from their content? “In the early days, a publisher had to do everything…now there are lots ofcooperating players, making the job a lot easier.”Tim: Back in 1995, in the early days of the Web, I wrote an article called Publishing Models for InternetCommerce. It was based on the idea that publishing can give us a lot of insight intohow the Internet is going to play out. The lesson I drew from publishing is there’s not asingle business model. There are countless, overlapping business models – from marginalto very successful – in a really rich ecosystem. Take for example, in the US your kidsmay come home from school with this thing: “Hey, buy magazine subscriptions and you willsupport our school”. There’s some company that uses school children to market magazinesubscriptions! And there’s something else called PublishersClearinghouse that has contests and giveaways to get magazine subscriptions. So thereare these funny business models.We have subscriptions, and direct sales to consumers and mediated retail sales, andadvertising, and combinations of all of the above. We have people who make their moneyproviding infrastructure or assistance in these models – ad agencies, printers, rackjobbers, distributors, retailers. It’s a rich and complex environment.After we sold GNN [Global Network Navigator] to AOL in 1995, I remember talking to TedLeonisis about this idea – and he said: “Oh, I get it – you’re saying where is thePublishers Clearinghouse for the Web?!”“What we’re seeing as the Web develops is that we’re building a richer ecology ofoptions.”In the early days, a publisher had to do everything, from generating the content tohosting and caching it, to acquiring customers, to selling advertising…and now thereare lots of cooperating players, making the job a lot easier. What we’re seeing as theWeb develops is that we’re building a richer ecology of options. So subscription isbecoming a valid option. So is downloadable paid content. So is advertising – in factthere are new forms of advertising. You know, we used to think that it was only bannerads – and they got bigger and bigger and more intrusive. Then Overture and Googleintroduced this concept of context-sensitive text ads and that stuff really enabled whatChris Anderson is calling The Long Tail. But thestory’s not over – we’re going to see more and more kinds of paid content. What’s its Job?“We often get blinded by the forms in which content is produced, rather thanthe job that the content does.”The other thing you really have to think about with all this is – we often get blindedby the forms in which content is produced, rather than the job that thecontent does. With eBooks, a lot of people got all hung up on the idea that an eBook wassomething that you put on a computer or a handheld device that allowed you to read abook. As opposed to thinking of an eBook as the answer to a whole set of differentquestions – OK, well what job does a book do?So for example a fantasy novel does the job of entertainment. Using that analogy, I’dsay an MMORPG like Everquest is an eBook. It’s a very clear successor to Lord of theRings – an exploration of how you would do a better fantasy novel on a computer. Justlike movies grew out of stage plays. Originally they used to point a camera at the stage,then they realized they could move the camera and do all kinds of different things.“What new technology does is create new opportunities to do a job that customers wantdone.”A lot of the publishing that I do really has two jobs: one is teaching and the otheris reference. Safari is chiefly an online reference tool, so we’re exploring newways of putting our information in a reference context. For example we built a web services API so that Safari could be builtinto, say, a developer tool and become a help system. We’re looking at it like this: whatare we trying to accomplish here? Similarly, if you’ve looked at the O’Reilly Learning Lab, we’ve recently doneonline training – because, again, that’s one of the things we do. We teach people.So there’s not a single business model, and there’s not a single type of electroniccontent. There are really a lot of opportunities and a lot of options and we just have todiscover all of them. Take music – the music industry was so focused on selling songs that they completelymissed the ringtone business. What new technology does is create new opportunities to doa job that customers want done. “In the morning the milkshake needed to be thicker , to last longer,and in the evening it needed to be thinner so it’d get drunk faster.”There’s a great talk that I heard Clayton Christensen give(he’s the author of The Innovator’sDilemma). He was the one who I first heard using the “job” analogy. He talked about astudy that Harvard Business School did for McDonalds, about milkshakes. They areapparently McDonalds’ most profitable product, but the company wanted to figure out howcould they make it even more profitable. What the Harvard researchers did was they wentand watched people at McDonalds – and asked what job was the milkshake doing? Andthey discovered that the milkshake drinkers fell into two large groups. The bulk of thesales were in the morning and in the late afternoon. And they figured out that in themorning milkshakes were bought by a solitary commuter and the job was to while away thecommute. And in the evening the milkshake was bought by the single parent coming backwith a crowd of kids from a soccer game or whatever – and the job of the milkshake was tobe a reward to the kids and the parent was always saying – hurry up and finish yourmilkshake! So in the morning the milkshake needed to be thicker, to last longer,and in the evening it needed to be thinner so it’d get drunk faster. So it wasdoing a different job at each of those times. And I think we have to apply that kind of thinking to electronic content – what are wetrying to accomplish?RSS and Web 2.0Richard: A number of bloggers have noted that RSS was a common theme throughoutthe Web 2.0 conference. Russell Beattie said that“RSS was always mentioned [at Web 2.0 conference] in the context of Web Services ingeneral”. Where do you see RSS and other syndication technologies fitting into the“Internet as Platform” framework? “RSS is clearly, far and away the most successful web service to date.”Tim: RSS is clearly, far and away the most successful web service to date. Andit kind of demonstrates something that happens a lot in technology, which is thatsomething simple and easy-to-use gets overloaded (in the sense that object orientedprogramming uses the term). I mean it’s the classic example of Clayton Christensen’s innovator’s dilemma. WhenHTML came out everybody said “Hey this is so crude, you can’t build rich interfaces likeyou can on a PC – it’ll never work”. Well it did something that people wanted, it kind ofgrew more and more popular, became more and more powerful, people figured out ways toextend it. Yes a lot of those extensions were kludges, but HTML really took over theworld. And I think RSS is very much on the same track. It started out doing a fairlysimple job, people found more and more creative things to do with it, and hack by hack ithas become more powerful, more useful, more important. And I don’t think the story isover yet.  “As happened with the web, the business models come later.”The fundamental idea of syndication and the ability to redistribute content via webservices, is a very powerful idea and we’re going to see more. There was this wholefascination with Push back in the late 90’s with companies like Marimba and Pointcast –and they tried too hard to make that work and to build a business around it. (AlthoughMarimba eventually did make a nice business in the enterprise, with software updates.) Itwas too early and too freighted with stuff that was good for the companies but not forthe customers. As is often the case, it came back from the wilds as something notsponsored by companies with business models but by independent developers who were justtrying to make stuff that worked for their own needs. As happened with the web, thebusiness models come later. But this whole idea of people subscribing to content that they care about I think isfairly fundamental. We’re basically dealing with a world of information overload andbeing able to tailor your personal portal is a pretty powerful idea. And I think we’regoing to see it increasingly used. last_img