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The Web 2.0 Transformation

By Curt Finch
Sep 27, 2006 4:00 AM PT

One of the original leaders of the open source movement, Tim O'Reilly of O'Reilly Media, kicked off a blogosphere firestorm in late May by sending a cease-and-desist letter over the use of the term "Web 2.0," as his technical conference is trademarked by that name.

The Web 2.0 Transformation

The complaint has since been withdrawn. Having open source gurus involved in trademark disputes always seems ironic -- but in this case it is particularly so, since Web 2.0 is all about openness, flexibility and "freeness." What is Web 2.0? Why are people excited about it? And why should you care?

Clearing the Fog

There is a lot of disagreement about what "Web 2.0" means. Let's clear that up.

One answer is that Web 2.0 refers to the propensity of recent Internet applications to be more collaborative and provide for a richer user experience:

Web 1.0 was a Web site that looked like a brochure or a resume. Web 2.0 is a blog.

Web 1.0 was your newspaper's classified ads -- just "Webified." Web 2.0 is eBay or craigslist.

Web 1.0 was Netscape -- that is, here's some software. Web 2.0 is Google; there's nothing to install, but it's powerful.

Web 2.0 is about harnessing collective intelligence and eliminating the software release cycle -- it's about providing services, not products. It's about trusting users as co-developers of content or even of technology. As an example, Amazon.com does this with its user review system.

Stylish and Streamlined

A more cynical definition of "Web 2.0" -- found in the blogosphere in Europe, where they tend to be more conservative about technology -- is "Bubble 2.0." What they mean by this is that some marketers have gone off the deep end applying this term to anything -- and they're right. (Europeans are always right -- just ask them.)

Bubble 1.0, of course, burst in March of 2000 when the Nasdaq reached 5,000 points (it was 2,261 at market close on Tuesday). Some companies emerged successfully from that bubble, and some did not. Bubble 2.0 will probably be smaller, but it will have some winners and losers, too.

Web 2.0 includes a social dimension, greater openness and transparency in process. It includes the use of new technologies such as really simple syndication (RSS), Web service definition language (WSDL) and extensible markup language (XML).

It has a more open style and a "keep it simple" approach. Many of these attributes go hand in hand. For example, open source technologies tend to be simple, transparent and lightweight. It's more an attitude than a specific architectural protocol.

Here's some of what Web 2.0 has to offer:

  • New technologies, like XML, simple object access protocol (SOAP), WSDL and RSS.
  • Collaboration and content repurposing, like Sourceforge.net or Youtube.com.
  • Different business models with longer "tails" -- like Google Adwords as opposed to DoubleClick.

The Wikipedia is a great example of a Web 2.0 application, as are mashups like Rememberthemilk.com. A mashup is a Web site or Web application that combines content from more than one source.

"On demand" offerings from companies like Journyx and Salesforce.com fit into the new paradigm as well. With Web 2.0, groups of users within companies control their own destinies by sharing administration responsibilities more than was the case with previous software models.

New Technologies

Web-oriented architectures based on XML, SOAP and WSDL make mashups possible. Rememberthemilk.com is a Web site that combines Google mapping technology with personal task lists, allowing users to view on a map where tasks are located in the real world, helping them to plan the most efficient way to run errands and get things done.

IBM's answer to XML is representational state transfer (REST), which exposes elements of an application via the Software as a Service (SaaS) model. Journyx Timesheet's WSDL API enables similar mashups to occur with its SaaS site.

Salesforce.com's AppExchange push is based on the mashup concept as well, and it's heavily dependent on XML as the application programming interface (API) mechanism. IBM is another vendor that is shifting its innovation strategies toward enabling a broader Web environment, as opposed to just adding new features to existing applications like IBM's Lotus Notes middleware tool. To this end, the company is working on technologies like dogear -- similar to Del.icio.us -- and Feed Me, an RSS-based improvement to the old IBM Tivoli Enterprise Console product. Technologies that allow a richer user experience in the browser -- like Google's Gmail and Maps -- are also considered to be part of the Web 2.0 movement.

Internet Communities

Youtube (video sharing), Digg (IT news voting) and Wikipedia (way better than Encyclopedia Britannica Online) exemplify the community aspect of Web 2.0 thinking. The content comes from users, not authorities, and it's amazingly high quality.

One of the greatest communities on the Internet is Sourceforge.net, where Python, Perl, Apache, PostgreSQL and thousands of other great technologies were developed. The company that owns this site, Va Software (Nasdaq:LNUX), realized that the collaborative project-oriented atmosphere created on Sourceforge.net would also be useful for large IT shops like those at FedEx if they added some security features and issue tracking.

Sourceforge Enterprise was born, which allows companies to securely pull external software developers into their development process -- whether they're from partners, customers, or the public at large. For an example of how Web 2.0 is impacting governments, compare sites like DavisWiki.org to a traditional city Web site.

Older firms, like eBay or Amazon, are arguably successful precisely because of the more collaborative nature of their Web sites. Amazon lets you vote on books and then vote on other peoples' votes. eBay has buyer and seller rankings based on feedback. Content is king in both cases. In fact, Amazon lets publishers -- even small ones -- include content relevant to their book in the listing for the book. The ownership of this information becomes questionable once uploaded. See how Amazon wins?

New Business Models

Web 2.0 focuses on the fundamental shift in how businesses are delivering value. Third parties are empowered, and consumers can become content producers or repurposers of content in new and fascinating ways. Napster is moving to a model where its 2 million monthly visitors will provide advertising revenue in addition to revenue from buying music. Two new tools are available with its free music service.

Narchive is a new tool that allows a user to create a "Wikipedia" of favorite music and related information.

Napster users will be able to share songs with friends via e-mail, blogs or Myspace pages.

New business models based on advertising, subscription, usage or revenue-sharing will crop up that will feel very different from traditional technology licensing. Web 2.0 is a shift -- a shift away from closed, inflexible, proprietary models to a more collaborative, participatory, open model for content. It's a shift toward a world where we are all authors, videographers, programmers and contributors. Companies that enable this process will win, and those that don't will lose. It's as simple as that.


Curt Finch is the CEO of Austin, Texas-based Journyx, a provider of Web-based software that tracks time and project accounting solutions to guide customers to per-person, per-project profitability. In 1997, he created the world's first Internet-based timesheet application -- the foundation for the current Journyx product offering.


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