Web 2.0: Think it through

A COUPLE of stories in the Financial Times are getting some attention because they’re calling into question the sustainability of the Web 2.0 boom amid a tough economy and a lack of revenue.

The first article — Web 2.0 fails to produce cash — quotes Roger Lee, a partner at Battery Ventures, as saying: “There is going to be a shake-out here in the next year or two.”

He’s right, of course. Many Web 2.0 companies, some of them with excellent products, are going to disappear, relegated to the so-called dead pool. Some will do so because they will run out of money, and others will die because they’re run by twits who lack good business sense.

Twitter, a service for sending and receiving short messages, has become the epitome of what ails Web 2.0

Ironically, the Financial Times article talks up the short-messaging service Twitter (note site might be down), probably the one service that epitomizes what’s wrong with Web 2.0. Not only does Twitter lack a revenue source, but it’s often broken and its leaders have demonstrated poor business judgment.

But the folks providing the financing believe it has a future because people continue to use it regardless of its shortcomings. The trouble for corporate investor relations website managers is figuring out if they should use Twitter or wait for Google or someone else to offer a similar service.

The latest issue of Online IR Trends has a piece on Twitter, so I’m not going to delve into it more here except to say it’s an important issue because no IR website manager wants to stake his or her reputation on a service or idea that is going to be unreliable or bring disrepute to their organizations.

The second Financial Times article — Web 2.0 euphoria tempered by social problems — is actually all about widgets, mini websites that are distributed across the web.

The article includes some negative sentiment about the widget business, which is probably accurate from the point of view of someone hoping to make money on widgets. However, if your objective is to distribute information and maintain a close link to stakeholders, then widgets can be a very effective way to do it. We have an in-depth feature on this topic in the current issue.

As an IR website manager you have to read these things with an analytical mind and understand the biases and perspectives of the people being quoted. Web 2.0 offers many opportunities for IR website managers and their service providers. But it’s risky to rush in before you’ve done the required due diligence.

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