The Web 2.0 is only a year old, and already plans are in motion for its funeral. I hear people talk about the return of 1999 (heck, even I posted about that), and in the same breath the impending .bomb. The other night I attended a [retro party for Web 1.0](http://upcoming.org/event/20836), only to hear and make sarcastic project plans for Web 3.0. And you thought Internet years pass quickly.
With all that excitement and all that skepticisim, I’m just going to conclude that the Web 2.0 is going on a trajectory path much different from Web 1.0. The bad memories are still fresh, some lessons have been learned, housing bubble still in full swing, but mostly, it’s a totally different landscape.
If I had to summarize Web 1.0, I would say it’s all about [insane business models](http://en.wikipedia.org/wiki/Webvan) coupled with [very defensible ideas](http://www.amazon.com/). The Web 1.0 was all about a new way of doing business, it was also highly centralized. At first the incumbents didn’t believe the Web could take over brick and mortar (who in their right mind would use a credit card online to pay for something they can’t touch?). Then they believed their brick and mortar business models work on the Web. Whichever, they made room for [innovation](http://www.ebay.com) to take over.
But a few years of instant riches set the tone, and everyone got busy trying to cash in. For the small startups that meant a crowded playing field they couldn’t compete in. For the well-funded ones, the stakes were so high they could never recoup their investments. IPO share prices were set based on the expected ROI of future sales of the shares, but shares were not in short supply.
I’m not seeing insane business models in Web 2.0, at least not yet. Right now the focus is on companies that can start small and stay lean. But I’m not seeing defensible business models either. If you have a [cool idea](http://del.icio.us), then you’re one of ten other me-toos. If you solve an [essential problem](http://www.bloglines.com), then you’re standing on the tracks of the GYM bullet train. And this time the incumbents are fresh out of grad school, they don’t suffer the innovator dillema. They’re either developing it, or in the process of buying you, or just bought your competitor.
If 1999 was a rebound from the dreaded mergers of the 80’s, and everyone wanted to do a rockstar IPO, then 2005 is a rebound from the dreaded VC-funded bankruptcies, and acquisitions are the exit strategy. A big IPO is the type of company you want to be acquired by. It’s a sobering reality with a different game plan.
But the impending sense of doom has to be supported by some excitement and hype. Where is that coming from? Turns out there is one credible source for the fresh new car smell, sans big cash out. The blogsphere.
The blogsphere, along with sister podcast and young brother vblog, is stealing ground from big established players, long-term incumbents that just can’t react. They either can’t believe there’s a [new way](http://wikipedia.org) of doing business, or too busy [dragging](http://www.riaa.com) their business models to the Web. Either way, they’re making room for innovation.
Except that the new way of doing business is all about distributed news, distributed op-ed, entertainment, reviews, etc. The sum is worth more than all established media combined, but that sum gets distributed over millions of people. There is no big payoff for a small handful of people.
The blogsphere as its own hype machine is a damn successful one. It’s also a very tech savvy hype machine: the people who know what it means are the people who write the software to run it. And that hype machine can’t tell the difference between a million voices talking, and a million Web services buzzing. The fresh new car smell is sticking to anything that it touches.
But here’s the difference. The longtail that are blogs is connecting us with the longtail that is Web services. And if there’s anything you need to know about the longtail, is that the longtail follows the head, and that the longtail is about distributing a lot of money to a lot of people.
So where do we go from here? I’m placing my bet on a lot of small services, just useful enough for a hand-picked audience, just cheap enough to support a cottage industry. Replace shareware with webware. And a lot of startups acting as small-time [talent](http://www.flickr.com) [recruiters](http://upcoming.org) for the big high-tech studios. A hollywood model emerging right here in the Bay Area, and peacefully co-existing with a lot of people running around with their [handycams](http://www.ning.com/).
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