How to make a billion dollars in web services.

One of the biggest web 2.0 ideas is to use member generated information and content. Supposedly, people will want to add their own content to contribute to the flow of information on a website. In reality, that isn’t how it works. People hardly ever do things just for the greater good. (The wikipedia is an oddity in this sense.) But there is a way that user submitted/created content can be the backbone of a web service/company.

You have to provide two services.

Now, these two services have to be distinct and different in all but one way. They revolve around the data. So what exactly am I saying? Let’s use Google as an example:

Google allows webmasters to have their content displayed as search results. Webmasters want their web pages to have a high rank in these results so that more people come to their site. When more people come
to their site, they make more money. Simple.

Google also allows people to search the Internet for anything. People want to search Google because they have a lot of web pages indexed and a very well engineered search algorithm. When people are given accurate results, they are happy and end up spending money or clicking advertisements (or so the webmasters hope). Also simple.

By serving two separate markets that need each other, we have a viable service. One demographic provides the content because they get something for it. The other demographic uses that content because they also get something out of it.

Let’s call this a two demographic service model. It’s should be a fairly well known idea, but with the recent influx of web services I think people should remember it.

Of course, any service like this is only technology based. And web services are one of the easiest things to copy, what with sites like rentacoder and getafreelancer having hundreds of jobs posted for site cloning. You could have Digg ripped off for under a grand and within two weeks. So, if you do create such a service, expect immediate competition. For the consumer and user, this is of course a good thing. For you, the service owner, it means a lot of work.

So how does one survive and/or thrive after creating a two demographic service model?

First of all, hopefully you have had the advantage of being first to the market. That usually counts for quite a bit. But in order to keep that momentum, you need to do a couple of specific things…

Be smart about your features. There is no need to implement every idea that pops into your head. If your service has search as the main service for one of the demographics, make sure you spend the majority of your time simply refining the search.

Watch both the demographics carefully. Make sure you are seeing every trend from both perspectives. If people aren’t getting enough out of sharing information and pushing content to your site, they will not bother. When that happens, the other side feels the effects, and they will stop using your service as well.

At the end of all this web 2.0 stuff, there will be a few major companies that have survived and become tremendously successful. Yahoo and Google did it during the last rush, because they each served two markets and had excellent technology. I’m not saying that a one market company simply can’t survive, but it will be much harder, and more than likely they will be forced to look at other demographics in order to expand. Amazon is doing just that now with services like Alexa and the Mechanical Turk.

It’s a proven multi-billion dollar model. You just need to find the right way to use it.

Cliff Notes Version: People will give you content and information if they get something in return. A good way to give them something in return is to serve another group of people as well. We’ll call this the two demographic service model, and it worked for Google.

Feel free to comment below, call me an idiot, show me that people have already said this, tell me your company will work a different way and be better for it, etc. I am very open to input and criticism.


3 Replies to “How to make a billion dollars in web services.”

  1. hello, i am sort of a see by learning type of guy. I seem to always come close to a great ideal but when applied, it never comes through for me. I am at a brick wall to even making a million, I have tryed many hustles, but to no avail succeeded. How does people with less talent than me make money so easy. its even becoming hard to make a thousand dollars. I use to try to street huslte when I was a TEEN, but I made money fast and furious. Now since Im lagit, I cant even make a descent living. I do music, but due to compition and money issues, its just a dream. And I write movie scripts, but I am in alabama with debt out the ass, so I can I leave and change my situation? Do you have any kind words or are you struggiling like me?

  2. .Im moving on from this same situation{im already wealthy}
    .Time does not exist
    .The future belongs to those who live intensely in the present
    .Your thoughts are cause and effect,consistently
    .if you thinkin the same dumb shit you will get the same results
    .the present is the only reality
    .Everything you want already exists

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