Web 2.0 | Amy Shuen

Summary of: Web 2.0: A Strategy Guide: Business thinking and strategies behind successful Web 2.0 implementations
By: Amy Shuen

Introduction

Dive into the world of Web 2.0 and discover how it revolutionizes the way businesses, customers, and partners interact in the book ‘Web 2.0: A Strategy Guide’ by Amy Shuen. Learn from real-life examples of companies like Google, Goldcorp, and Flickr, who have successfully embraced Web 2.0 strategies to disrupt traditional business models and foster innovation. You’ll explore key concepts such as network effects, freemium models, and recombining innovations to bring value to your customers and business. This book summary will provide you with the insights and tactics used by successful Web 2.0 companies, paving the way for you to harness the power of the internet to transform your business.

Web 2.0: Transforming Businesses

In “Web 2.0,” companies are reaping the benefits of counterintuitive approaches to the digital revolution. By giving away their main product, Google has become a corporate giant that thrives on Internet searches. Procter & Gamble’s online contributors generate 35% of its new innovations and boasts an 80% success rate, twice that of its competition. Meanwhile, Motorola has thousands actively involved in content tagging and bookmark creation. With traditional firms transforming into innovative online stars, Web 2.0 is revolutionizing the way businesses, customers, and partners interact.

Crowdsourcing the Golden Mine

Goldcorp, a traditional Canadian mining company, used crowdsourcing techniques to increase its annual gold output tenfold. Through the Goldcorp Challenge, the company invited global geologists to locate “six million ounces of gold” from geological data posted online. The challenge attracted more than 1,400 virtual prospectors from 50 countries who analyzed Goldcorp’s database to select the best mining sites. After implementing the winning ideas, Goldcorp recovered 504,000 ounces of gold at a $59-per-ounce cost, compared to the previous cost of $360 per ounce. Crowdsourcing proved to be an innovative and cost-effective solution for Goldcorp’s mining operations.

The Business Revolution of Web 2.0

The shift from the static Web to the dynamic Web has created boundless opportunities for businesses. Through network effects, customers add value beyond just monetary contributions. High-tech publisher Tim O’Reilly advises building applications that improve with increased usage, harnessing the Web’s economies of scale and connectivity. The transition to Web 2.0 may pose challenges for businesses, according to William Sahlman of Harvard Business School. Online innovation provides a chance for businesses to combine, remix and customize for unlimited potential.

Succeeding with a Freemium Model

Flickr, the popular photo-sharing website, demonstrates how to succeed online with the “freemium” business strategy. This strategy builds “collective user value” by enabling its army of users to upload, store, index, tag and share their photos online at the company’s website – all for free. Flickr makes money by offering premium services (“Pro Accounts” are $24.95 annually), contextual advertising, and transaction/revenue sharing with partner retailers. The company drives its profits by providing services for free and monetizing them by offering additional premium services and advertisements.

The book showcases how Web 2.0 has changed the way businesses operate, with positive network effects driving exponential growth and willingness to pay for online services. Flickr’s monetization practices never interfere with its users adding photographs, ensuring that positive network effects can only grow. To succeed with a freemium model, companies should look to increase positive network effects and monetize them in a way that is not intrusive to users.

Dominance of Google in the web platforms

Google’s prevalence in the web platforms is attributed to three phenomena: Direct Search Network Effects, Direct advertiser network effects, and Advertiser-searcher cross-network effects. These factors create a virtuous cycle where each Google search increases its relevance, leading to advertisers paying for enrollment and increasing Google’s top position. Powerful web 2.0 network platforms such as Google, Yahoo, eBay, Skype, Wikipedia, Craigslist, and Flickr shape the internet, with Google dominating the paid search marketplace.

LinkedIn’s Global Connection

LinkedIn’s success is driven by its ability to connect people globally through the internet. By using the freemium model, LinkedIn provides a platform to connect with friends, colleagues, clients, and their networks. With just a few clicks, users can create valuable connections that span the world.

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