Web 2.0 - Bubble or Californian New Age Cult?

Last night I went to the Chinwag event discussing whether Web 2.0 was a bubble or not. Chairing the event was Mike Butcher (who gave us a quick resume of Bubble 1.0 - though he missed out Jellyworks, my all time favourite 1.0 scam). A brief and irreverent review of the panel follows:

Firstly, Zopa system's Dave Nicholson didn't talk about Bubble 2.0 really, he talked about Zopa - in essence the message from Zopa was neither a borrower nor a lender be, being the middleman is much more profitable as you take 0.5% from both sides of the transaction (recurring in the case of the borrower). Apparently the Banks can't compete because they have ludicrous rules about things like, oh, staying solvent and other people can't compete easily because Zopa has built a "community" around their proposition (although expansion into the US is still to happen....line one on the SWOT analysis there I think).

As an aside, I wonder when the financial regulators will start to look at these various emerging "non-banks" as otherwise whats the point of having regulations, regulators etc etc - probably after the first one fails and the founders abscond to Gibraltar with little old ladies' savings if past history is anything to go by.....

Next up to not talk about Bubble 2.0 was Skinkers' (I thought it was a chocolate bar initially....) Matteo Berlucchi. In essence they build peer-to-peer backend software for desktops that focusses on speed, not volume. This is valued by media companies and people who need to see news as it occurs. To be fair to Matteo, he did eventually note that Bubble 2.0 was still M&A event driven and seemed more like the mid 1990's, ie a few companies being bought at completely ludicrous prices but most selling far more reasonably.

However, if the last two talks were anything to go by - ie fervent pitches about their companies despite the context of the event - it felt just like the heady days of Bubble 1.0

Ryan Carson of Carson Systems (et al) actually talked about Bubble 2.0 from the start. His view is that there was no bubble right now, mainly because its an M&A market rather than an IPO market (give it time, Ryan, give it time...). Ryan noted that the cost of building Web 2.0 apps is much lower than Web 1.0, it can be done under private ownership, so you need not be not beholden to investors, financiers, money lenders etc. He then nearly diverted into a product his company was building, but reverted back on track by pointing out that their Web 2.0 product build was still a sideline - in essence, "don't give up your day job" (which in Carson System's case is talking about Web 2.0 - still far more lucrative clearly .

Finally, Andrew Orlowski of that gloriously irreverent Web 1.0 journal, The Register. His view of Web 2.0 was that it promised an alternative utopia where World 1.0's problems could be happily solved, and it was more akin to a Californian New Age Cult - makes enough sense to get past your analytical faculties, is all embracing and unspecific enough for loads of people's dreams, fantasies and so on to be projected into it (and fantasies projected out of it, judging by YouTube et al), and is actually just a buzzword generator for the next wave of Californian Cult Maharish...sorry, Management Consultant Gurus

(Thought...is Om Malik the Om in Ommmmmmmmmm)

Was it a bubble - not financial, but definitely rhetorical (or as us Web 2.0 consultants might say, memetic...) in a way not seen since the heady days of AI. Essentially Web 2.0 does not solve any major problems - its basically presentation layer people trying to solve infrastructure layer problems. Spam will kill Web 2.0 as it cannot (or will not) solve it.

(On that matter I saw that some guy on Carson System's Ad conference flyer is saying advertising over RSS is the Next Big Thing - now here's a hint - first Ad I see on RSS, your feed is dead. )

Andrew's own view was that the major waves coming were (i) more deep in the infrastructure - RFID + near field economics, and (ii) sorting out the whole Compensation for Creation of IP (usually Media) arena - amen to that!. He noted that France very nearly voted for flat fee licence for media last year

Then it was Question Time...I can recall a few real nuggets.

- Mobile Web 2.0 - its an Oxymoron, the morons have to open up the mobile system before it happens and then the value floods out of their ecosystems. Carriers know this, and want to make future money from transactions, not transport, so won't open up until that is sorted. No bubble here.

- Internet Penetration - nearly stagnant in OECD for 5 years, its just the bandwidth that is going up. Large parts of the population have no 'Net access.

- Microsoft - spend $4bn on R&D annually, very little to show. Have started to licence out some of their technology to companies for a stake (Disclosure - we have done very similar work for other R&D outfits to help spin out some of their ventures). I think before people take a pop at R&D shops, what they often don't get is the hard yards that have to be put in between proving something conceptually, building a proof of concept, and proving something commercially.

- Brands - don't like Web 2.0 because it allows consumers to see past the b.s. that they have built their empires on (etc etc). Big Advertisers are dipping toes slowly in the waters, the real revolution is from SMEs using search ads because you can actually see what works. And its often the mundane, not the hifalutin' - is this the Death of the Creative Ad Agency?

- Social Media - everyone is now jumping on the bandwagon, but it has to actually add value, not just Ads (we blogged on this here)

- Advertising - there is a finite limit to the amount of money in Advertising, it cannot fund everyone's plans. More interesting is the view that as Webvertising is more efficient, spend on Ads overall will go down as it goes nline.

Of course, half the fun of these events is the networking afterwards, lots of interesting conversations including B2B marketing in Web 2.0, metadata requirements for Web 2.0 video search, and a long, irreverent and wide ranging discussion with Andrew on a host of subjects, ending with the good old "what are the VC's doing now".

Take aways for us..well, why be Consultants if we can be a Californian New Age Cult?. Problem is that London doesn't really have the weather, but still...I shall have to meditate on this further.

Postscript - Found some other posts on the event - Ian Delaney here and Seamus McCauley here