I’ve wanted to write a post like this for a while. Here is my view of what is happening on the web today and what is driving innovation.
Phase 1. The first great change on the web that created a real big enconomy was when Ebay came along. To cut a long story short, Ebay now allows 750,000 people to make their living off of ebay each year. These people aren’t employees of ebay but they are using ebay as a platform to generate a living.
Phase 2. Affiliate programs. thousands of people have made millions off of affiliate programs, started by amazon and perfected by many other companies hundreds of thousands of people are recieving payments each month for promoting various products and services. There have been many many millionaires created in this space and a lot of companies.
Phase 3 Google Adwords. Before google adwords affiliate marketing was just something that people with websites could do. With the advent of adwords and its massive traffic now suddenly everyone could mass buy traffic and resell it for a higher price. Overnight another industry was created employing tens of thousands of people who make a living off arbitrage.
Phase 4 Google Adsense. This was the real game changer, before people could only monitize content via affiliate links. The problem there is that if you had repeat traffic you wouldn’t make much. If you had traffic from countries other then what the merchant would cater to you were out of luck. Google provided a steady stream of constantly changing advertisers for your users. This allowed you to monitize them somewhat effectively for the first time.
The first several stages were all about empowering people to make money using someone elses platform. Once google adsense came along you could for the first time make money off your own platform. People could build hobby sites or anything else they desired and monitize it to some extent. Now several years after adsense’s launch we have several hundred thousand people making money off adsense and slowly building up digital empires.
Ebay Created a economy of 750,000 people making a living off its site. Google created a program where a couple of hundred thousand people could monetize their sites. Now thanks to google, huge drops in hardware costs and better software individuals and small companies can build sites that were impossible only a few years ago. At the moment there is no better example then me, if you would have said 3 years ago that someone was doing 600 million pageviews a month out of their apartment with no employees you would have been laughed at. There are thousands of other people who in the past 3 years have used adsense to grow and build large sites. In the next 2 or 3 years we are going to see thousands of these sites run by little groups taking over industries. This is because they will have reached critical mass. Even if only 1 in a thousand is successful that will still hurt established players in a big way.
So what will happen to the “build anything with ajax and get funding right now” mentality?
I think that VC’s will start to wake up and realize that Ajax is a feature and not a product, at the same time how are 100-1000 or so VC funded companies going to compete with a couple of hundred thousand webmasters who have created sites wanting a piece of the action? Many of these webmasters would be perfectly happy with $100/month. But if even if 1 in a 1000 of those adsense driven sites is very successful your entire industry could be screwed. Just look at online dating.