Don Dodge coined Web2.0 as “Web App + 2 Founders + 0 Revenue”. Funny, and not too far off the money.
Don goes into detail about the various ways that Web2.0 firms are funding their efforts. This goes from Freemium (free basic membership with paid premium package) to Subscriptions to simple Advertising.
One thing that he doesn’t mention is the “community-in-a-box” business model. A community in a box is not about selling any specific product, it’s simply about creating an exciting product creating a buzz around it, and then delivering eyeballs and mindshare to a larger company.
Let’s face it, despite their best efforts Netscape’s Digg clone failed miserably. Google couldn’t do nearly as good as YouTube despite of the grotesque amount of money at their disposal. Yahoo’s Image Gallery could never do what Flickr does. Nokia could have never attracted a userbase the size of Twango. And whoever pays $x Billion for flixster (or the next social media site) is not going to care about monetizing the site they are going to care about the community they are getting.
One of the main differences between this boom and the first technology boom, is that, like Dan states, Web2.0 can survive as an idea + 2 young enthusiastic founders. All we need to build a community-in-a-box is a good idea, and a couple beat up servers somewhere and a couple hours a night spent cranking out some slick PHP or Ruby code.