Erick Schonfeld writes about what web widgets will do to the economics of the web:
With widgets will come ad buttons and sponsored marketing messages gussied up as content. In an attempt to break through the clutter, advertisers will be creating even more of it. Widget startups will spring up that not only disseminate information to an atomized Web, but use their widgets to gather information as well in order to recentralize and repackage it. While the center may not hold, new centers will arise from the ashes of the old.
Widgets have their benefits, but I’m not totally thrilled with their implementation in the current crop of Ajax start pages. Widgets don’t talk to each other and don’t do a good job of integrating information… they leave that to us and our poor overtaxed brains. Widgets are mostly read-only and that’s a step backwards on what should be the chmod 777 web.
Dare Obasanjo knows why companies prefer widgets over data APIs or ad-free feeds:
providers of data services would rather provide you their data in ways they can explicitly monetize (e.g. driving traffic to their social bookmarking site or showing their search ads) instead of letting you drain their resources for free no matter how much geek cred it gets them in the blogosphere.
You can stick ads into a map display but how would you put them into a geocoding function call? You can put an ad at the top of your calendar widget but how do you put one in an iCal feed? Even if there were a way (is there?), a calendar display could strip it right out.
It’s funny that we’re talking about how widgets change the economy when every Econ 101 class starts with widgets, but of the tangible sort. We don’t have a good economic model for what’s happening right now, but, anyway, it’s not like the economics of tangible widgets revealed the secret of business success in the industrial world.
What is the new economics of widgets going to look like? The economics of abundance. The economics of attention. Will it be advertising based? I hope not.
Here’s something to think about: what’s becoming scarcer and scarcer is our attention and our time. Won’t people pay money for services that filter out the information that pollutes their minds? And what pollutes our minds the most? Advertising.
It sounds kind of backwards, but I wonder if Web 2.0 companies are spending too much time thinking about how to monetize their services without asking their actual customers–the end users of the services–to pay. We’ve seen how screwed up an industry can get if the consumers of a service aren’t the payers: look at health care in the United States.
I would pay for a web-based start page that did what I wanted. Companies would pay for next-generation portals that are actually next-generation portals and not just incremental improvements on the same old disconnected chunks of barely filtered information we’ve seen for years. Radically improved portals could radically improve productivity and satisfaction at work. And that’d be worth paying for.
5 Comments
Sorry, I’m too cynical - I think the widget world is bound and determined to be ad supported. I’m surprised that hasn’t polluted more start page widgets yet, I think it will.
I hate to think you are right about that being a reason for less API/data services and more widget services, but I think you are.
Maybe there will be more models where the free versions are ad-supported and the pay versions are not… but that gets even more Weird in an aggregated widget world - micropayments anyone??!!
Scott,
I realize this may just restate your point, but has anyone considered that the ad-support for content/widgets/what-have-you actually are micropayments? CPC models are all about micropayment. OK, I know you mean consumer-funded micropayments as opposed to advertiser-funded, but you get the point. It is an attention economy in many ways and giving up a share of your screen real estate is the price we pay for these tools. Now, if some enterprising widget provider follows an Opera or Eudora-like model (advertising-supported and paid versions), so be it. However, I think most companies will have an advertising stream as part of their business model, if for no other reason than its revenue potential is well understood by angel investors and VC’s.
It seems like some widget creators are using them as ‘portals’ to draw users to their main site. Its almost as if they regard widgets as ‘Banner Ads 2.0′ — they give you a small bit of info, entice you to click to get more, then, boom, you are on their site fueling their page count rewards of choice.
I agree that there really is no interoperability model for widgets — even within a given framework like netvibes or google. You would have thought that that lesson would have been learned from the Java Portlet shortcomings.
I agree with the analogy of third party paid health care. But how else can it be paid? Any situation in which a few will need a lot of care and most will need very little is calling for an insurance model — but social insurance, i.e., community rated, rather than experience rated. The moral hazard of using too much is usually balanced by the unpleasantness of medical care.
Dad, I lured you into commenting! Score!
Perhaps everyone should pay for their everyday health care and we should have catastrophic coverage as well. Why shouldn’t people make their own decisions about whether to go in to the doctor when they have the sniffles? Why shouldn’t people learn to choose nurse practitioners over doctors based on cost for things like well-baby checkups or things that are amenable to rule-based diagnosis and treatment?
Good point about how the moral hazard of using too much can be balanced by how unpleasant it is to get medical care… except that medical care doesn’t have to be quite so unpleasant. And maybe if there were a more direct link between consumers and providers, it could become more pleasant, at least for the basic health care I’m talking about having consumers pay for. You probably can’t make kidney dialysis or chemotherapy all that pleasant.
Thanks for the comment, Dad.
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[...] Anne Zelenka has some insightful comments on the current widget state of the art, economics involved, and where widgets need to improve. She writes from a technical perspective, but everything she says applies to brand-building widgets as well. One of her points is that widgets must enable users to do something personal and special if they hope to deliver unique value. Yes, indeed. [...]