Cover Story

Web 2.0 - Angels and Demons
_{By Arun (’99A8), Uzma (’03 A7)}

If you think writing on people’s ‘wall’s is graffiti, ‘scrap’ is not a verb, or only birds ‘twitter’ed then you are missing out on a revolution. This revolution (or evolution as some consider) is silently but determinedly sweeping the web world and changing the way we look at the internet.

The chances that you are viewing this issue of Sandpaper on the Web are 9 out of 10 and if not do check it out on ( http://sandpaper.bitsaa.org/). It’s pretty clear that the internet and the World Wide Web have changed our lives. But then sometimes, the evolution of something so revolutionary can go unnoticed especially when it’s as ubiquitous as the internet.  Oh yes, it’s been evolving not only in size, content, reach and all the other obvious way but then, it’s been evolving also in its very nature. Atleast a part of it has been evolving in a very silent but powerful way…something which most of us might have been unwittingly acquainted with Web 2.0.

Web 2.0 refers to a perceived second generation of web-based communities and hosted services — such as social-networking sites, wikis, and folksonomies — which aim to facilitate creativity, collaboration, and sharing between users.

- Wikipedia

Web 2.0 signifies user interaction. The emphasis in Web 2.0 is on the community. It is about providing the user with a system with which she interacts along with other users to create content.

- Anand Morzaria, CEO, Pennywise Solutions, India

Orkut/wikipedia/ajax 

- Ramu, Graudate student, Computer Engg, CMU (USA)

A bunch of bullshit.

- Shashank, Software engineer, Efficient Frontier, California, USA

I have no idea.

- Ashish, Chief editor, Sandpaper 2.0


Erm…yes…I mean…ob da machan! (Man, am I clueless!)

- Arun, before doing his research

Any idea what Web 2.0 means? It is very probable that you would have heard of it somewhere but then what is it? When we sat down to write this article, some random ideas popped into our heads including “oh yeah, Web 2.0…must be a new version of the internet”. Only later did we realize that this was as rustic as saying “I am my dad 2.0”. Getting the drift?

There’s a lot more than meets the eye to this term. It also became clear that this cannot be clearly defined because there exist no boundaries. Therefore, it was interesting to ponder on how to approach writing this piece. After a million milli-seconds of thought, we decided to get as many viewpoints as possible, talk to people, listen to what they have to say and learn along the way.

So what you are about to read is a modest but honest interpretation of what this is, whether it’s a phenomenon, is it just a fad, how is it affecting our lives, how is it benefiting the common man, how is the common man benefiting it (oh yeah, when it comes to Web 2.0, this makes sense), the entrepreneur angle, the big internet companies angle and of course the BITSian angle in it all.

What is Web 2.0?

In the box to your right are some of the definitions that we came across and heard. Some of them represent what Web 2.0 is imagined to be (so far) and others represent what others think of it.

Ever since the word AJAX was coined by Jesse James Garrett in February 2005, there has been a pseudo-revolution of sorts in the internet world.  Infact no one gives credit to Microsoft for developing the technology that forms the backbone for this wave, generally known as Web 2.0. This was in a way favorable for the nerds and Microsoft-agnostic techies as this technology would not have been accepted, the way it is now, if Microsoft had marketed it.

Pointy-haired bosses, consultants and MBAs (who constitute a majority of the venture capital/angel investor scenario) got caught in the bandwagon. Their love for jargons led to the baptism of what they imagined to be the new world wide web as Web 2.0.

Venn 2.0 - What Web 2.0 is really about

Anand Morzaria, CEO of tolmolbol.com a Web 2.0 startup says, “The emphasis in Web 2.0 is on the community”. Anand is a 2001 Masters in Finance passout from BITS Pilani. He was the president of the students union in 1999. Currently, he is the CEO of Pennywise solutions and their latest venture tolmolbol ventures boldly into the Web 2.0 space. Tolmolbol is a portal that helps you find local service providers across a whole range of service categories be it a hospital, a restaurant, a dance school or any other business. Apart from local search for peer-reviewed businesses, it provides the residents of scores of Indian cities a forum to ask questions, share experiences, write reviews, post classifieds, discover events and connect to people in their locality.

What is interesting about Web 2.0 is that it is not a geek sitting in his cubicle that we owe it to. It is you and me who are driving it. The blog that you wrote about your funny encounter with the lady at the book-store, the video that you posted on YouTube, the photos of your vacation in Hawaii last year shared on Flickr or your long lost school friend that you scrapped on Orkut - you and me are ushering it in. As Anand points out, ”Web 2.0 is about providing the user with a system with which he or she interacts along with other users to create content. The real power in Web 2.0 is in the hands of the user. This is a shift from the earlier model where the creator of a portal served the content while the users were the consumers. In Web 2.0 the user is both the creator and the consumer.”

Viral marketing refers to marketing techniques that use pre-existing social networks to produce increases in brand awareness, through self-replicating viral processes, analogous to the spread of pathological and computer viruses. Viral promotions may take the form of funny video clips, flash games, or even text messages.

Viddu.com is a social shopping website. Srinivas Dangeti, a Bachelors degree holder from BITS Pilani is a co-founder of Viddu Inc. This website is different from other shopping websites as it builds in the aspect of sharing and networking into your shopping experience where friends can share their experiences and ask others for their experiences. In addition to doing that Viddu also provides a unique way to see related reviews and deals from popular review and deal websites. The consolidation provided by Viddu allows an online shopper to find what they are looking for at a central place instead of searching for the same item in a hundred different places.

Gone are the days of viral marketing. The blogging-era and social networking gave an entirely new perspective to the way people were lured towards a new website or a Web 2.0 based service. In the initial days of the Internet, people termed the Web as the bastion of nerds and that which would lead to an entire generation becoming anti-social.  Social-networking turned that theory on its head and gave birth to monsters like MySpace, Facebook and many more clones, which have enabled people to get closer and have also bolstered the way its users perceive the Web to be.

AJAX (Asynchronous JavaScript and XML), or Ajax, is a web development technique used for creating interactive web applications.

Rich Internet Applications (RIA) are web applications that have the features and functionality of traditional desktop applications.

But where’s the money?

Love it or hate it, one cannot ignore Web 2.0. The dynamics of the Internet have rapidly changed ever since. The stakes are too high and the enormous sums of money involved make it virtually impossible to overlook the buzz and the hype. At the very beginning, there were the del.icio.us's and the Flickr's which laid the trend for a completely new revenue model as far as Web 2.0 is concerned. The key-word is traffic. Lay down the infrastructure, get the traffic and then the users create the content for you, which ultimately spins money for you. It sounds pretty simple but getting traffic and sustaining the growth of traffic is a mammoth task in itself.

Web syndication is a form of syndication in which a section of a website is made available for other sites to use.

RSS is a family of Web feed formats used to publish frequently updated content such as blog entries, news headlines or podcasts.

Web 2.0 Startups. If three
is a crowd, then what is this?

New economies of scale have emerged. This implies scaling in terms of people, the number of unique page-views, in other words, traffic. But then hidden behind the scenes is the real financial driver of everything in this field - online-advertising.

As the tagline of Yodle Inc, another BITSian start-up by Kartik Hosanagar, Associate Professor, Wharton Business School, goes “Get Found” is really what businesses are fighting it out for. His new venture in his own words: “Yodle provides a platform for local businesses to advertise online. We tell local businesses that consumers are no longer using yellow pages to locate them. Instead consumers use the web to locate local businesses. So, they should transition their ad dollars online. However, online advertising is too complicated for local businesses requiring them to participate in auctions run by Google and Yahoo. We manage the complexity for them and provide a platform where they can get the desired reports and output without having to worry about the back-end complexity”.

Kartik differentiated his startup from other Web 2.0 companies, among other things, with having a solid revenue model based on detailed financial analysis. He is apparently convinced that online advertising is here to stay judging from the nature of his new venture. But just how important is online advertising?

Anand of Tolmolbol says “In India alone advertising spending is projected to be around $40-$50 million. Given the availability of new formats of media I see a collaboration of advertising across media. Ads will be everywhere and will be targeted based on people’s behavior. Even people on the move, the so-called transumers will be targeted. There will be ads specific to them and their needs. If you like a particular brand you will be served ads based on your specific behavior be it on television, web or other media”

But the problem with online advertising is inherent vagueness with its revenue model or simply said the lack of a lucid revenue model. But on the other side, one rarely needs significant upfront investment to setup a Web 2.0 firm.

However, the Product Manager of a Web 2.0 website (a BITSian who wished to remain anonymous) has a slightly different take on it “To me Web 2.0 as a term does not refer to any business / revenue model as such.  It’s an evolution of applications and usage of the same in the internet space. The applications and users have become more participative and contributing in nature, and that’s what is taken advantage of here.

Besides, the more a user participates the more he or she is benefited. For example suppose I have a profile on a social networking site and if I perform a search on that site for any term, the relevance would be increased by picking up keywords from my profile and the social network which I created for myself. It could also depend on the kind of activities I am engaged in. Therefore, unless I participate, I don’t give any information to the application to help me later on with the overall experience of using the website.

Web 2.0’s own tag cloud

I mentioned previously that Web 2.0 is not a business model because it is merely an “enabler” for the business models being considered for the website. Just being a Web 2.0 site does not make it the core business rather there is no core business by being a Web 2.0 enabled website. If someone actually said that, it would be totally absurd because Web 2.0 does not define the product or the business or even the industry involved. People could have products (not websites but actual commodities, goods or services) which have websites dedicated for it and to these websites are added the elements of the 2nd phase of the internet evolution to make the product and site more effective.

Wall - Application on Facebook used to write messages to your friends

Scrapbook - The equivalent of a Wall on Orkut

Twitter - A social networking and micro-blogging service that allows users to send “updates" to other users who have signed up to receive them.

An example for this could be the website which TATA motors recently opened for its new car, the Indica Xeta. (http://thexetashootout.com/) is not the usual website which showcases the cars features but it’s a micro-site which encourages the public to take part in a competition. This concept would work and achieve its goals only if user participation is sufficient enough.

Another example in this genre could be the now famous Sunsilk gang of girls.”

Venture-capitalists, angel investors and funding agencies are pumping in money to tap these advertising dollars that are very quickly moving to the Internet. The idea is to influence young blood, preferably college drop-outs or recent graduates to create new Web 2.0 ideas and then distribute the rewards in a seemingly fair fashion.

Ycombinator led by Paul Graham is an example of a new type of funding-system that funds software and web services startups. According to their website they, “.. care more about how smart you are than how old you are, and more about the quality of your ideas than whether you have a formal business plan”. Reddit funded and later bought over by Conde-Nast (wired publications) is a benchmark for every new aspirant in this field. The mantra is to have an idea, develop it, get funded and pray to be acquired or swooped up by a bigger shark.

Google took the whole thing very seriously and revolutionized the already stagnated email market with the refreshingly new GMail and of course, not to forget Google Maps. Making the browser work like a desktop application seemed to be the holy-grail for people who wanted to get their hands dirty in this game, which has led to the birth of applications over the Web like document, spreadsheets and even operating systems. We got a scoop straight from the horse’s mouth (read an engineer at Google) on Google’s ambitions in the Web 2.0 space

“Many people say Google is already Web 2.0. That may or may not be depending on how one looks at it. When it comes to Google’s aggression on acquisitions of companies in this field, yes, Google is doing quite a bit with YouTube and Writely, a big startup in the field of browser based applications.

Tags are keywords. Analogous to sticking labels on physical objects, you can use tags to label digital 'things' such as blog posts, photos and web links.

Folksonomy is the practice and method of collaboratively creating and managing tags to annotate and categorize content.

Google Base is also something new on the block which is pivoted on user interaction. In Google’s own words “Google Base is a place where you can easily submit all types of online and offline content, which we'll make searchable on Google (if your content isn't online yet, we'll put it there).” That’s the business side of things…making money and being on top being among the objectives of any competitive firm. But there is another aspect to all this as well, the social side of things which truly benefit the public at times. For e.g. Google maps was used to mark areas affected by the hurricane Katrina using the “mymaps” feature where users can annotate locations on the map with interesting data. This is an example of user generated content being used during times of need. Also Google earth is being widely used for hurricane relief”

With the burst of optimism around and the number of start-ups that have cropped up it suddenly looks like we have hopped onto a time machine and are back to times of the dot-com boom and bust. So is there a similarity between the dot-com boom and the current revolution?

“Yes. There are several similarities. It presents a new opportunity like Web 1.0 did and few people fully understand which opportunities will be the billion dollar opportunities (like Amazon, eBay, Google from Web 1.0) and which ones will not be. Given this limited understanding, investors spray and pray, meaning that they fund a lot of businesses hoping some of them will be the next eBays and Googles of the world. So, one would expect that many of these Web 2.0 firms will fade away. Nonetheless, just like with Web 1.0, there will be some new winners in this Web 2.0 world and I am sure they will have as much impact as eBay or Google did. One notable difference though is that the dotcom boom required significant investment in physical infrastructure (fiber optics laid by the telecom companies). That was very expensive and also led to some of the largest bankruptcies. This time around, the infrastructure is available and web 2.0 can ride on the infrastructure built out during the dotcom boom. Also, Web 2.0 companies are easy to bootstrap and do not require the millions needed to build an Amazon. So, on the cost side, there are several positives.” says Kartik objectively.

Microsoft will acquire 20 companies a year for the next five years, ranging from $50 million to $1 billion.

- Steve Ballmer, CEO Microsoft Corp @Web 2.0 conference, San Francisco, USA

Nevertheless bean counters have played the game even more cautiously this time. But there are evidences to counter that as well. 2% of the new Web 2.0 start-ups provide something substantial to the system. Kartik had the following to say regarding the way a Web 2.0 company can benefit and differentiate itself from the rest of the crowd. “What all Web 2.0 companies benefit from are significant user involvement and strong network effects. User involvement is important (e.g., YouTube does not need a large staff to identify and upload good videos; Wikipedia does not need a large staff to create new content). Network effects are where the value of the services increases with the number of participants on it (e.g., more people on YouTube imply greater volume and diversity of content). Thus, these networks will grow automatically once they clear a certain threshold size.

Opportunities for differentiation are limited. The cost of setting up a Web 2.0 firm is low. There is rarely significant IP (Intellectual Property) to prevent entry by competitors. So, lots of me-too startups will spring up and it makes it hard to separate the wheat from the chaff. So, the best hope for a firm is to grow really fast and use the network effect to compete against new rivals.

We are still generating a lot of garbage. How long will the people bear the barrage of advertisements that are being thrown at them? There is also a dearth of a killer-application a la email for Web 1.0. The services and applications available now take the concept of web-enabled a little further by creating a fast and a more responsive interface.

Facebook “Gifts”. These images actually cost
a dollar to send to someone!

A Silicon Valley geek however has a rather interesting view of the whole Web 2.0 hog.

“Web 2.0. The very mention of these words make my skin crawl, like when you saw that creepy older relative from your childhood, who was a little too fond of having you sit on his lap.  Its funny how very few people actually define Web 2.0, but every two-bit scumbag company in the Silicon Valley is ready to jump on the bandwagon.

So, what exactly is Web 2.0? Whence did it come to haunt the "Internet"?  Around 2004, a company called Google introduced two web-based applications called GMail and Google Maps. These applications felt richer and more responsive than most web applications before.  Google resurrected a long-forgotten browser/HTTP feature (the infamous "xmlHttpdRequest") that allowed websites to fetch data asynchronously from a web server.  GMail and Google Maps were truly novel and useful web applications.  But we can't say the same for the efforts of the inevitable shitstream of me-too companies that followed.

Today, the Internet is littered with retarded-sounding Web 2.0 efforts like wishlistr, twitter, etc., which have no real revenue source, serve no real purpose and make no underlying engineering advancements. Instead they simply rely on what www.uncov.com appropriately calls "loser-generated content", tagging and "social networks".  It reminds one of the business plans of the Underpants Gnomes in that South Park episode:

• Build AJAX-y/Flash-y website
• ???
• Profit!!!

Web 2.0 applications are supposed to share a few common properties- making the browser richer in functionality and more responsive ("pages load faster!").  The whole effort is akin to putting lipstick on a pig.  But it hasn't stopped these Webtards from trying anyway.

Let's not forget the dime-a-dozen Web 2.0 attempts to create websites for managing to-do lists.  I mean, come on! The ultimate solution for managing to-do lists has already been created - it’s called a sticky note. I don't need to login to a freaking computer to remember to get milk from the grocery store. And then there are blogs.  Blogs, per se, need not be Web 2.0, but the inevitable march of Web 2.0 progress is slowly taking over the " blogosphere”. I went to a database conference recently where someone said "Our mission is to index every blog post ever written". Oh great. They want to index every badly written, narcissistic and ultimately meaningless outpouring of "feelings" on the internet. Someone didn't get the memo - It takes an *infinite* number of monkeys typing on an *infinite* number of typewriters to produce anything worth reading.

A discussion on Web 2.0 can't be complete without mention of the 800-pound gorilla of Web 2.0 efforts, the one site to rule them all - Facebook. Admit it, you have an account, and you have wasted at least an hour a day poking friends and stalking that girl from that party. There is now an ecosystem of parasitic companies whose raison d'etre is to build "Applications" for Facebook.  Let’s look at one of the more popular Applications- “Superpoke". What, pray, does this application allow you to do?  You can "throw a virtual sheep at", "grope", "spoon", or even "dry hump" that special someone.  If that doesn't woo her, nothing will.  Then, there is the Gifts application. Let me break this one down for you.  You pay Facebook a dollar to send someone a fricking image file of such things as cakes, monkeys, and champagne glasses.

Web 2.0 is indeed changing a few things around here in the Silicon Valley. But I wonder what effect it’s actually having on the people. Time will tell because the kids who use those gazillion and one websites need to grow up first! Amen.”

Web 2.0 market share

Though this dude would like to paint a bleak picture of Web 2.0 however, people like Anand are very optimistic. “I think the dot-com bust happened because the market was not ready. It would be wrong to draw a parallel. The market is much more mature.  Web 2.0 is here to stay.

In fact, Web 3.0 is supposed to be the next revolution (or evolution) in the offing”. Anand sees Web 3.0 ushering in the collaboration between applications, between technology and media. “I see it as a platform where content can be pushed from the web to any other format of media and vice versa .”

Google’s recently launched OpenSocial, a set of common APIs that application developers can use to create applications that work on any social networks (called “hosts”) that choose to participate seems to be paving the way.

Although Kartik in spite of his success so far has a measured view of the future, “In my mind, Web 2.0 will create a lot of clutter. The democratization and decentralization of the web is great. But, it is getting hard to separate the expert contributors from the wannabe experts. I think Web 3.0 will go to a hierarchical setup with participants getting rights and responsibilities based on their expertise and in a meritocratic way. It won’t be the centralized world of Web 1.0 but it won’t be the flat world of Web 2.0 either. I feel that the participants on the Web will get organized and people will take on specialized roles. Another aspect that I believe will emerge is the integration of search and recommender systems. I think there will be automated recommenders all around us.”

Well, so there you have it folks. The future of Web 2.0, it’s BIG. Collaboration and sharing that have been the spirit of Web 2.0 are here to stay. Anand who’s a serial entrepreneur with two start-ups Pennywise and tolmolbol in his kitty gives his two cents for BITSians aspiring to start-up, “User interaction and retention is the key in Web 2.0.  A portal that can figure out what needs to be given back to the community and can create a system by going back to the user will emerge winners.“

With Internet penetration on the rise, people are becoming more participatory in nature and to all the budding BITSian entrepreneurs, go out and grab your share of the Pie (shown below). Yodle, tolmolbol and Viddu have already done it. You got a cool idea, scrap one of us on Orkut.

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