There is no doubt that we are seeing some early indicators of the power of Web 2.0. Mash up sites are creeping up all over, and reeking havoc on search engine rankings. Social networking sites are popping up all over. And RSS feeds are becoming almost as common place as an email newsletter. Web 2.0 is very near, and will be here in 2006.

So, how does this negatively effect some business? There are two immediate business models I see in jeopardy, if they don’t adapt quickly.

The first business model in serious jeopardy are, for lack of a better term, paid social networking site. These are the dating sites like Match.com and Yahoo Personals, as other types of sites looking to bring people together, like Classmates and Reunion.com.

With websites like mySpace and Xanga growing by the millions, why would consumers pay to view people’s profiles? Obviously these dating sites offer their own features, whether they are personalized quizzes to match people, or their own instant messaging system. But before 2006, every major social network site will have these features. Why would someone pay a membership fee to meet someone in their area, when they can just search for them on mySpace? Ask most teenagers how they would meet someone online, and it’s doubtful many would say through a dating site. They would simply view profiles on their social network site of choice.

This holds true for Classmates and Reunion.com. mySpace already offers a field for previous school. Soon other sites will create an even better search filter and allow people to find each other online in a much easier fashion. And as these sites gain competency in search engine optimization, they will even have Google providing traffic directly to their profiles.

The second business I can see running into issues is the paid hosted service application. We are currently evaluating new sales force automation systems. SalesForce.com has a wonderful SFA and has a relatively attractive pricing model. They also offer a great API for other services to plug in. We are weighing out if we can plug in our current project management tool. This made me think about the large choices of open source project management and SFA tools out there. These are now all being built with API’s. This means you could start to find small modules for SFA, project management, bug tracking, version control, etc… and plug them all together through their API’s to make an industrial strength CRM tool.

So, how do these companies contend with such incredible competition? The only thing they can do is try to adapt and grow with the technologies. Unlike the music industry that tries to fight technology, figure out how to leverage the change and ride the wave. Classmates.com for example is already more in the data collection business than reuniting classmates. And Salesforce.com, by creating such a great API, puts them selves as a stable, centralized component in a system we may want to create. These companies are smart, and they will adapt successfully. On the other side of things, dating sites have never seemed to see the big picture, and it’s my guess that they will continue trying to evangelize the quality of their members over the free models. But in the end, if they do not figure out a revenue model that does not charge consumers, they will lose market traction and die.

Technorati Tags: web2.0, online dating, social networks, CRM, SFA

This entry was posted on Wednesday, December 28th, 2005 at 9:21 pmand is filed under Internet Marketing(t) , Web Development(t) . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.