07 September 2006

People Power 2.0

One of the great conundrums of the open world is how to make money by giving stuff away. The solution, as far as I can tell, seems to be to capitalise on the uniquely personal aspects that can't be replicated by competitors by copying. After all, as I've described elsewhere, openness demands that anyone can build on your work by simply taking what you have done and using it, so you can't depend on making money from the control of open content, for example.

Again, as I've written before, it's striking that many top pop stars, for example, now make more money from their concerts than from selling music: the latter is simply a marketing device for the former. This means that music could be given away - no DRM - and stars could still make lots of money.

Now here's the same idea applied in a very different field - Web 2.0 companies. As this interesting piece on a recent acquisition in this sector points out:

With a wide array of sources for private equity providers there is a great deal of competition for leadership and vision in spending their money effectively. Increasingly this calls upon both startups and developed properties and their management to be "hired" in effect to help the "winners" finance their next dreams.

It's a natural adaptation to an investment market that's much less likely to push half-baked ideas to a hasty IPO and far more likely to invest in people with the acumen to move quickly and effectively in rapidly shifting content markets driven by equally rapid shifts in technology.

The really innovative and unique thing that a Web 2.0 company has to offer is the intelligence and originality of the people that power it. Others might be able to copy and re-implement your ideas (you know, that sharing business), but if they can't come up with an equivalent flow of creativity, they are always a step behind.

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