Magazine article Marketing

Andrew Walmsley on Digital: Social Interaction Is Key to Web 2.0

Magazine article Marketing

Andrew Walmsley on Digital: Social Interaction Is Key to Web 2.0

Article excerpt

Google's pounds 803m acquisition of YouTube, NewsCorp's pounds 310m purchase of MySpace and the recent rumoured interest in student networking site Facebook, valued at more than pounds 500m, suggest the market is taking web 2.0 seriously.

But what is web 2.0, what makes it different to websites that have gone before, and why is there so much interest in this sector?

The traditional media world is one where power is concentrated in the hands of a few. The capital cost of launching a TV channel, magazine or radio station has ensured that only those with very deep pockets could afford to participate, because building distribution and an audience took a long time.

The internet has challenged this. The capital cost of setting up a website is a fraction of that required to create a newspaper. New business models based around revenue-sharing have enabled those without access to marketing budgets to secure distribution across a wide swathe of the web and build an audience quickly. Sites such as Yahoo!, MSN and Google are not simply the biggest websites in terms of audience, they are among the biggest media properties in the world.

Back in 1998, Geocities was the third-most visited website. It allowed people to manage their own web page, adding photographs, their favourite bands, films and commentary. Yahoo! bought it in May 1999 in a deal then valued at dollars 3.6bn. This was a good price, even for bubble time, yet we have not heard much from Geocities since, although it is still there.

There is something different about My-Space and YouTube, though, that makes them worth the money being thrown at them: social networking.

Unlike Geocities, where creating a webpage was a largely solitary affair, sites such as Bebo, MySpace and YouTube allow users to share their work with others, connect their page with friends' pages, leave comments and see when they are online.

This ability to share and connect with other users is the defining characteristic of web 2.0, and it is a global phenomenon. Mixi, the so-called Japanese MySpace, debuted on the Tokyo stock exchange last month, valued at pounds 1bn.

In South Korea, where broadband connectivity is about 70%, social networking has become a national obsession, with a set of social codes evolving that govern behaviour on Cyworld, the Korean version of MySpace. It is considered rude in the extreme to visit someone's Minihompy (Cyworld's term for a homepage) without leaving comments, and real pride is taken in how you decorate it. …

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