It’s good to see Internet entre-preneurs grinning again. Web 2.0 makes them happy in several ways that its bubble-era forebear did not. Here’s a critical one: The new breed of online business has no need to advertise. Have you ever seen an ad for Skype? Any kind of pitch, anywhere? Yo, Skype don’t hype!
How can any business grow without an ad campaign? The key is what publisher Tim O’Reilly calls an architecture of participation. Web 2.0 outfits like Skype, Wikipedia, Flickr, and del.icio.us don’t need to promote themselves because, unlike their Web 1.0 counterparts, they connect people directly to engage in meaningful activities. In doing so, they’re disrupting markets – and challenging the Web’s ethos of transparency.
Rather than bragging about how insanely great its VoIP products are, Skype makes its users insanely productive by letting them talk with any other user worldwide for free. The company makes money by charging users for connecting to phone systems outside of its network. It’s a freemium model: Attract users with free services, then charge them a premium for special features.
The Madrid-based startup Fon, in which Skype is an investor, turns the freemium idea on its head – and takes Web 2.0 a step further – by letting users make money by doing without features. Fon has a mad scheme to cover the earth with inexpensive, in some cases free, Wi-Fi. It even has its own crazy lexicon. People who have bought a Fon wireless router (or installed free Fon software on their own router) are Foneros; those who haven’t are dismissed as Aliens. Some Foneros choose to share their connections with one another in return for free Net access at any Fon hot spot; they’re called Linuses (after Linus Torvalds). Others, known as Bills (as in Gates), choose to pay for access at Fon hot spots. In return, they get a cut of the revenue when an Alien pays to log on through their router.
In the old days, building an international telecom infrastructure and growing its market share required a colossal pool of capital. Today, Foneros do both of those jobs themselves. Sure, the company has $22 million to burn, which is nothing to sneeze at. But it also has an advisory board full of A-list bloggers like Dan Gillmor and David Weinberger, a powerful engine propelling the network to critical mass.
Bloggers are sometimes pigeon-holed as pundits or journalists. In the Web 2.0 economy, they can be kingmakers, channeling crowds of willing participants wherever- they like.
A business model like Fon’s makes this situation tasty indeed, but it’s also ripe for abuse. It means that people who command the Net’s attention can link to startups, hype them, and start cashing checks. As The Wall Street Journal’s Rebecca Buckman reports, “The avalanche of blogging about Fon, much of it from people now tied to the four-month-old company … reveals the possible conflicts of interest such complicated relationships can dredge up.” How long before the most powerful bloggers turn themselves into payola machines?
Such temptation hangs like a dark cloud over the blogosphere. But there’s a countervailing force: Anyone with a browser can communicate with the Web at large. Users don’t need bloggers to tell them where to go; they can easily tell each other. They could do to Fon what the denizens of Friendster did when MySpace came along: Use the old network to move their peers to the newer, cooler one.
Ordinary users could even become the architects- of their own participation, forming viral, networked, profit-seeking enterprises in which users don’t just make money but take ownership-. Imagine a version of Fon in which Foneros get a share of stock for each hot spot they add to the network. The more energy and resources the evangelist-employee-owners put in, the more tangible wealth they get back.
As Karl Marx might have put it, participants of the Net unite! You have nothing to lose but your roaming fees.
Email bruces@well.com.
- Bruce Sterling
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