As the winter of discontent of content owners and YouTube begins, a certain rumbling is growing. If you look back at the first Blog posts describing the Web 2.0 phenomenon, they often called it an illusion, overrated or a bubble. Very often it is pointed out that while YouTube was sold for $1.6 Billion, it in effect only had $15 Million in revenue last year and now a host of other problems (if you count all litigation issues and tech issues, the costs of YouTube may well be above $1 Billion or so). That is assuming, of course, that Viacom and Co. will manage to convince the courts of their point of view.

However exaggerated this view may be - it has, on a fundamental level, one merit. The YouTube Business Model, as far as it is now established, is based on an unjust usage of copyright and the equity of copyright.

Now I would be the first proponent of the theory that the internet, as John Perry Barlow put it, is “the end of copyright”. In the sense that transmitting, copying and distributing knowledge and information has become so easy through the internet that an author who wants to earn the fruits of his labor is well advised to find new ways of establishing himself as a person and establishing derivative business models off the content he produces, rather than relying on licensing fees alone. Nevertheless, YouTube does not even give that to content producers and content owners. It is like a giant attention lottery, where the very few motivate the very many, through their success stories of 15 minute world fame, to copy their endeavour and try to achieve that kind of world wide recognition. However, who of those authors, even of those who have achieved that kind of short-lived fame, has actually managed to earn money off it?

That is why YouTube lacks the value chain one needs for a viable business model. That is not to say that YouTube did not achieve something very important. It created a platform for ubiquity of video content and facilitated the exchange, commenting and sharing of that kind of content. It taught users an important lesson- that broadcasting is not the prerogative of a few publishers. From there, to a viable business model is a different step.

Google may use the YouTube technology to create Google video ads and to create a platform for viral marketing (which actually may be a sound business from the position that Google has) but, anyone trying to copy the YouTube model must fail if he does not devise a value chain, a sound and profitable value argumentation, and defines what his market is.

In essence, the markets the emerging video platforms target is the advertising market or the market for sharing and licensing content- the latter being a very difficult one. The key to monetizing that kind of tool and achieving success in that kind of market will be to define the value chain and to make it track-able, so as to be able to calculate an operating margin and to devise ways of building a business.

None of the me too(s) and copycat models of YouTube has achieved that yet.

None, except one- sevenload.

sevenload is one of the most exciting business ventures I have ever been a part of, by defining a value chain which, because of its self-reinforcing nature, we call the “value mill”. By devising a technology to track not only usage of content, but also the revenue generated by the individual video stream and by devising a way to create specific audiences that add a lot to the advertising value that a video can have, sevenload has in effect solved the 3 main problems of any video business model.

For now I don’t want to describe, in too much detail, what sevenload does as we still have to establish our market leadership. But stay tuned to see how the first viable video business model on the net will continue to be established.

These are exciting times indeed… Last week saw me (us) at DLD with a fascinating charge of speakers and attendees - and a historic moment.

Conference host Hubert Burda, Owner of Burda Group, one of Germany’s largest Media Houses, jumped up on stage and delivered a smashing and spontaneuous speech in praise of entrepreneurial creativity, citing “companies such as sevenload and Alexander Straub” that revolutionize markets.

I also noticed that denkwerk has great recognition as the factory of ideas that is its name-giving founding idea. Great recognition on that even from competitor Regine Haschka of ID-Media, and from Paulus Neef, Founder of Pixelpark. We shared war stories on Wildpark back in the 90s. I bonded with Christiane zu Salm, said Alexander Straub and Martin Varsavsky (once more) as well.

Highlights were also David de Rothschild, fiercely engaged in educating children to ecology, and James Murdoch, who portrayed some really smart strategies to neutralize CO2 emission at BSkyB and earn money at the same time. His key was the climate opportunity as opposed to the climate change.

I will tell more soon…

Exciting conference! Loic le Meur at his best. The Usual Suspects turned up, a definite Highlight was Martin Varsavsky. But they even had Simon Peres come and the inevitable - at least if it’s campaign time in France and it’s Loics home turf - Sarkozy, who delivered a remarkably expectable speech in French to 50% international audience.

We boostrocketed as http://www.sevenload.com because we grabbed the microphone a couple of times, and I was positively surprised to see that sevenload and denkwerk and qype

http://www.qype.de

already had quite a reputation, even outside Germany. I enjoyed what happened off the panels, in the lounges, and in restaurant back rooms most - can’t say too much about it now, but Digital Life is bound to be exciting the next couple of months.

Another interesting encounter was a SEC-enforced very tacit Lars Hinrichs on the OpenBC/XING IPO, there’s one man who knows the pitfalls of Stock Market Law and will not put himself in a spot. We did end up however, musing about Greed and Selfishness as human traits that like to rear their ugly heads as soon as the opportunity arises…

I just spent an exhilarating and exhausting 2 days @ SIME

http://www.sime.nu

invited as a speaker by my friend Ola Ahlvarsson, Co-Founder of Boxman, Founder of result:

http://www.result.com

[btw the first time I see a company with a beta blog as only company representation on the web]

It was exciting to meet and talk to Loic Le Meur (sixapart), Martin Varsavsky (skype, Fon), Tariq Karim (netvibes), the inevitable Andreas Weigend (former CTO of Amazon and feature conference showmaster), Nico Lumma (mabber), and Bob Stumpel (advertising guru from holland). Microsoft was there to present its new Windows Live and how it sees the future of advertising.

A number of new startups out there, and many discussions about the individual gaining the means to become an economic entity on the web.

I had a slot with Tariq and Nico about Everything 2.0. I started off with a video about how

http://www.sevenload.com

was creating new opportunities for the Digital Boheme - in the person of jobless actors - to present themselves, having now, through sevenload, secured a job to present the leading dating platform neu.de as actors in advertising.

Link: sevenload.com

I then tracked the success of sevenload back to its appeal for a broad, real-world audience, fulfilling real (everyday) needs.

All this is gradually - and at a fast pace - changing the was we do business, and more importantly, the way our society works.

As always, that’s a difficult discussion. First of all it’s important to remember that “Versioning” the web is initially a marketing trick, albeit a powerful and a valid one. It does make sense to try to assess the pace and scope of change in and through the Digital Revolution. In our internal discussions at http://www.denkwerk.com we differentiate the technical, the social and the business levels of analysis. Our very broad clusters are as follows:

Web 1.0:
It is particularly inexact to retroactively dub the pre-2004 era as „Web 1.0“, since that is a rather vast period of time which underwent different phases in itself. When did it start? With Tim Berners-Lee & the appearance of Mozilla in 1993? With the first Social Network (sic!), the Well, in the 1980s?, With the ARPANET in 1968?

Tim O’Reilly coined “Web 2.0” as a call to reconsider the then ruling technical paradigms and the generalized underestimation of the social and economic impact of the internet in post-bubble headache times. But the 90s, the bubble, and 2001 – 2003 constitute a wild rollercoaster of different developments. In our view in short:

Technology:
The first simple websites evolved to more and more interactive, from static to dynamically generated, from handcrafted to cms-driven, from pure media to more and more transactive, and these vast increases in value remained through independently of the vast hyperbole of expectations that the New Economy and Irrational Exuberance engendered. In software paradigms though, simple web development and early script-based architectures and languages were supplanted by Enterprise Application thinking, the advent of web services, and the JAVA Revolution. After 2001, you were a wimp if you stuck to PHP.

Social:
Mostly Early Adopters went from discovering the web and portals as sources of information to accepting shopping, then dating and other increasingly interactive services and transactions.
The Internet, however, was never “lean-back”, a prerogative of TV.

Business:
The only really working business models (at high volumes) were
a) lead generation for existing brick and mortar business (“click and mortar”)
b) Online Advertising (mostly banner, after 2002 more and more search engine marketing)
c) E-Commerce (online sales, B2C or B2B )

BTW: Many ideas that now resurface in Web 2.0 were imagined just then, but failed because user behaviour and markets weren’t there yet. We founded http://www.oneview.com as a very early precursor of deli.cio.us, for example.

Web 2.0:
Somewhere around 2003, disgruntled entrepreneurs, the aforementioned PHP Wimps, the Linuxites, and others started reforming and having Galilean Moments („eppure si muove“ – “and the Earth does rotate”). That is what O’Reilly picked up at his conference in Fall 2004 when he coined Web 2.0.

Technology:
On the technology side, Web 2.0 can be oversimplified by describing it as a set of new or renewed technical paradigms:

a) the return of scripting and DHTML.
b) AJAX and the transformation of websites into dynamic applications
c) much faster development speed, prototyping
d) APIs and total interoperability of all digital services (mashups, microformats etc..), the rebirth of standards
e) the end of the concept of “the site”, with functionalities spreading across converging media (web, mobile, TV) instead

Social:
a) You Are Not Alone:
If “Web 1.0” was all about discovering the potential of interactive services, then Web 2.0 is the discovery of the Fellow Users, of the immense potential of finding online people that you can share interests and needs with.

b) You Can Do Things Together / User Generated Content:
New Web 2.0 tools let the vision of the web as a collaborative platform slowly become true: every type of content can be shared, discussed, rated, and messaging allows constant and instant, but also deferred and intermittent interlocution with other users (networking, messaging, Blogging, co-shopping etc…).

c) Mashup Everything / User Generated Functionalities:
The combination of different services, information, and functionalities that the technical paradigm shift of web 2.0 makes possible opens a whole new set of possibilities for networked and collaborative behaviour on the web that creates value from the wisdom of crowds and the knowledge of the few.

Business:
a) Businesses are under pressure and with the opportunity of adapting to the fact that the consumer / customer has an increasingly wide, reliable, and truthful range of sources of information and first-hand experiences with any given product.
b) Creating customer communities becomes increasingly relevant as a business factor. This increases the demand on long-term accountability and trustworthiness of business institutions
c) In the same vein, Business and Media monopolies on information and broadcasting power are dwindling with the advent of increasingly differentiated access to the opinions and knowledge of customers and the creation of increasingly valuable User Generated Content and Community-Based or Collaborative Functionalities. This doesn’t mean a perfect world of truthfulness, but it certainly shifts power to the customer.
d) an open question is by whom and how is this information power, the interlinking of customers, and the long tail of business, going to be aggregated, thus creating the next Googles?
e) On the long tail of business, even the most absurd niche markets can network worldwide, thus creating market volume until now completely untapped.

Web 3.0:
We don’t really need a new term – but it is clear that versioning will somehow be inflationary, since it is such a nifty marketing tool. So we might as well tackle the definition now (and secure some mind share early on, hehe).

In our view, Web 3.0 describes where the different patterns and revolutions might lead to. Think “minority report”, “Neuromancer”, “Matrix”, for early paradigms (not literally of course, we’re between 30 and 1000 years away from that). It is hard to describe and open for discussion, but we see the following trends:

Technology:
a) Interoperability and total convergence of all media and networks to form the Evernet
b) The End of The Site: Functionalities can be used by any user on any device in any network.
c) Everything is mashed or modular or snippeted or microformatted, so that a search on your handheld will deliver a topical article, four experts, seven alternative topical products to be ordered along with their ratings and reviews, three according services and information about what your friends or respected contacts think about the topic, all in one fell swoop.

Social:
a) The rise of the „Digital Boheme“ – in a No Man’s Land between employment, freelance and artistic lifestyle, everyone on the web can “market” whatever talents he has, whenever and however much he wants.
b) Thus, “virtual environments” will play a much bigger role in determining the social status of an individual much more than his geographic environment used to. In other words, the lost liberal hippie tech geek living in, say, Oklahoma suddenly gets a life and recognition – that’s one of the reasons for the hype about Second Life.
c) Thus a) and b) become more and more determining for the identity of the individual – with all due consequences
d) Technology and the networking of individuals and their expertise will lead to an increasingly efficient tapping of the Deep Web (that has been building up since 1974), thus creating a “semantic and human web”, where searching and finding delivers increasingly complex results, ranging from data / documents to Evernet functionalities and sites, to experts and interest groups and events.

Business – we call it VIRAL SOCIAL COMMERCE
In the virtual worlds of the web 3.0 or Evernet, every individual will get a much fairer share of his or her social and economic status. If until now, the consumer was an object of the economy, he increasingly becomes a an active element in every one of his areas of expertise and interests. (Someone who is into handmade puppets from the Münsterland [a region of Northern Germany] can connect to fans of handmade puppets worldwide an be recognized as an expert and set up business selling access, expertise, or even the puppets themselves – if he chooses to do so).

We could call it the Ebaying of life – but the differences to the Ebay model are:

a) it expands virally along social network lines
b) it is not focused on price, and probably not even profit-oriented, but is a blend of social and economic rewards that triggers individual behaviour
c) it is in an elementary sense democratic, with almost any space for very individual definitions of success and lifestyles.
d) thriving in such environments will require new business, communication, and marketing models in almost any industry.

In Science Fiction, the various visions of the emergence of a web interlinking society almost invariably include that web become a determining factor of social and economic status in the real world. We aren’t that far away from that, even if reality always tends to be mundane. What is almost certain is that already today, the web liberates the individual even from very difficult forms of seclusion, allowing him to overcome niche market intransparency and increase his social and economic impact in society.

What we are doing at sevenload (http://www.sevenload.com), itravel (http://www.itravel,de), oneview (http://www.oneview.com) and Qype (http://www.qype.com) is working toward that vision.

Join us, discuss, hire in, let’s create the tools of this evolution step by step!

I have been musing about what a recently befriended VC told me about his firm investing in a few “Superfounders” every year, while discarding thousands of Business Plans. First I felt flattered, assuming of course to be meant. When i asked him how he recognized a Superfounder, he said: “well, you know one when you see one”. Aha.

There is of course a very valid point in that a VC Partner known to have invested in some of the great successes in their realm of action does have the experience to recognize success in the budding. But maybe that’s just the point, “when it is [already] budding”.

Picture this:

Niklas Zenström spent some three years being laughed at for Skypester before moving to an unlikely Baltic State to rename it Skype and get rich.

When we got to know the Sevenload team, by all classic criteria of the business and VC scene I know, there was no way their imminent (and yet to be brought to full fruition) success was discernible. But i felt:

- Passion
- Nonconformism
- A dedication to User Value
- Borderless thinking
- and the proven will to bite the bullet in the face of adversity
- very low bullshit factor
- and a keen sense for the value of every single €
- and the ambition to shoot for the moon (even if you miss it, you’ll land among the stars)

…all proven in the biography, especially of Ibrahim Evsan, the Key founder - and as i know see as an observer of http://www.codingnight.de

It’s either viral or another proof that A class people attract A class people, because the whole team shows that dedication. In the myths of our time, it’s the Googleyness of Sevenload.

Which brings me back to “What is a Superfounder?”. I’m not sure there isn’t a fat danger of having a kind of simplistic Belief in the Strong Man. Where I come from,

http://www.denkwerk.com

which we founded as the idea of “A Company of Brilliant People”, dedicated to the above, to innovation, to having the guts to start new things, it is TEAMS that created the greatest success. And Team means that secret combination of personalities, talents, and experiences, that combine to bring the spice and the reality to any Grand Idea. So if being a Superfounder means dreaming that dream and creating that kind of environment, then maybe yes, I do feel like a Superfounder, Ibo certainly is, and Bill Gates, who said success is never achieved alone, damn sure is. [wow, me and Bill in one sentence]

But maybe the lesson of the picture in this blog is different: it is the teams that matter. And the less loud, less salesmany, less obvious secret toilers, the Wozniaks, the Myhrvolds, the Substance Makers are the ones that really count at least as much. In one word:

the Supernerds.

The world is abuzz with the changes spurred by the (third) arrival of video to the internet. There is truth in the perception, but many questions are unanswered by the hype.

The way we see it, three factors will create the actual value of video on the web:

1) ubiquity: it will evolve from a feature to a standard component of every website
2) involvement /interactivity: the business models that will succeed are those that combine the emotional appeal of moving pictures with a wide and differentiated range of interests reflecting long tail segments which in their combination reflect any given markets population diversity
3) cannibalization of existing markets: there is still no new money out there, so startups have to decide who’s pockets they’re after. The Advertising World? Media Budgets? B2C Entertainment? E-Commerce -> Retail? That is the Gretchenfrage.

Incidentally, that’s the exciting part of

http://www.sevenload.de

the board of which I just joined. they will beat YouTube in Europe, not as a copy. Al Ries in “The Origin of Brands”:

“If you want to beat the incumbent, you have to be the enemy of the incumbent”

So be it.

Exit phantasies, commercialisation discussion, is blogging worth the trouble - there are many signs that euphoria and passion, the web 2.0 sense of mission etc.. are giving way to the same kind of frenetic and less frenetic division of the spoils that we had in 2000.

That holds an important lesson for all entrepreneurs, especially since this time around, there will be no big bust - just failures and successes distributed along the bell curve.

Lesson #1:
Even if everyone is focussing on other metrics, make sure you’re earning money. It’s better to be smaller and profitable, i.e. independent, than growing and growing and going nowhere in terms of being a viable business.

MIT’s secret formula for success is CFIMITYM (Cash Flow is More Important Than Your Mother) - brutal, but to the point.

Lesson #2:
Focus on proving the business model, or, more likely, finding it in the first place. chances are, that gets you more and stickier users than pure play community building. Business Models tend to evolve where there is long term value.

Lesson #3:
Try to identify the basic need you are adressing - the more basic it is, the more chances you have. Poeple have eaten, slept, mated, vyed for attention and recognition, thirsted for knowledge etc.. for centuries… that’s where the money is.

Lesson #4
Look for the right people. Rotten Ideas have made it because of world class teams. And be honest to yourself about your won ability. Your abilities do not expand as you grow older, they diminish and gnarl like old roots. That makes you experienced and savvy in your field of expertise - and less and less of a generalist in others. Get Good people. Kennedy did (”A good manager hires better staff than he is”).

When the going gets tough, the tough get going…

The past weeks have been incredibly busy. Sevenload, Qype, Oneview, and itravel are achieving their respective crests.

http://www.sevenload.de has an exploding user base, has just won nicole da silva and a number of young stars had their start on the platform. It is now by far the most used German Video and Photo Platform. myvideo is raising a stink and faking their user numbers (check by looking up a user beyond # 800), but have little to now recognition in the relevant crowd. Remember “the Tipping Point” and you’ll know why that’s relevant. Ibo’s Team is just the better team.

http://www.qype.de is growing fast, getting really useful, and closing a new financing round (no details, it’s all NDA’d) - but just this much: Qype is going to be the dominant player. Stephan is an incredible guy and has a great team.

http://www.oneview.de are preparing their gamma, and it will rock. Full google-kicking potential. We will get our revenge for having been the first social networking/bookmarking site (1998) and not getting the recognition because the business model had no market yet in 2000. Great team there too, with two additions to the developer team.

http://www.itravel.de - stay tuned for the first real long tail social commerce site, you’ll see more and more of the community in the next three months. In cooperation with Sevenload!

I’m really excited as we are preparing Upload! 2006, which we hope to become the coolest web 2.0 / social commerce / next big thing event of this and coming years.

BTW: we are desperately looking for developers, marketers, tecchies, pr guys/gals, project managers, business developers, sales guys etc etc etc…. contact me, or denkwerk @ http://www.denkwerk.com

Hi, I’m back @ reading the basics, which i can only recommend:

1. The Cluetrain Manifesto - the bible for “power to the customer” revolutionaries

2. The Tipping Point - winning the multiplyers is the real model for building a community / social network

3. The Long Tail Parts I and II - that’s where it’s going, folks - you can’t think enough about the implications

4. Blue Ocean Strategy - THE method for innovation

Read it. Apply it.

Cheers

R0cketrabbit