Over the last year I've worked with organizations around the world that are attempting to grapple with Web 2.0 and the growing external marketplace pressure being exerted for the change and transformation of their businesses. Along the way, I've been fortunate enough to be able to identify and assemble a working list of some consistent recurring issues and themes around Web 2.0 strategy.  I've provided them below at a high level. Your comments and additions are very welcome as we try to frame up a consistent picture of what's happening in the marketplace.

It used to be a little surprising how long it's taken for Web 2.0 to begin to have serious impact on or even high-level interest in the business world.  However, the ideas have had staying power and have also largely been validated; there are now fundamentally different and very powerful new models for engaging with customers, designing our products, and applying technology in general to our business that are proven and have growing bodies of knowledge.  The Web has become the single most important driving force in many fields of endeavor as well as the leading source of both innovation and potent new modes for communicating, collaborating, socializing, and working together. It's taken a few years but businesses are now feeling the change in the air.

 

 

However, as I've said a number of times in my various discussions of Web 2.0, the power of the network has deep roots in some profound shifts in society and culture, particularly the singular move from push-based systems (the 1.0 era going way, way back until right around now) to pull-based systems (the 2.0 era from roughly a few years into this century and going forward).  That this shift is well under way is clear if you look at the sudden explosion of the blogosphere, social networking, social media, open source software, online communities, and peer production in virtually all things.  The good news (or bad news, depending on how you look at it) is that despite the remaking of more than a few industries already -- including media, software, advertising -- this shift is only just beginning.

This all raises the question of how to make the transition from 1.0 to 2.0 safely and non-disruptively with your business largely intact, perhaps even with a superior competitive position.  That this transition can actually be accomplished by most businesses is still far from clear though some early transitions have met with varying degrees of success.  This list represents some of what we've learned so far  about 2.0 transformation but it's something that strikes at the very heart of most businesses today: The rules for success are not-so-gradually changing and the marketplace is driving it in an often-subversive grassroots, bottom-up way.  The question now is no longer about 'if' but increasingly about thriving long-term, period: What are you willing to do to adapt to a new business world?

This list is aimed primarily at CTOs and CIOs since they are mostly likely to be located at the convergence of traditional business thinking and the wave of 2.0 change coming in off the network. However these ideas apply to anyone looking at how to embrace 2.0 transformation in their organization and take advantage of it.  This is one of the most exciting eras to be in businesses since so many directions are in flux and the outcomes, players, and market leaders of the near future are far from certain.  Those who can see the new opportunities clearly through the lens of 2.0 transformation not only have a fighting chance, but are able to seize them with once-in-a-generation ease.

Note: I've dropped the 'Web' in Web 2.0 for this discussion because one of the big lessons is that many traditional business thinkers turn off when they hear the word, even though Web 2.0 design patterns and business models have truly profound implications across any business today.  Consequently, hat the Web is driving most of these changes is being considered incidental for this discussion (though it's absolutely the opposite when actually executing on these new models.) Instead, this is targeted a discussion about the transformative models themselves (such as who creates the products and where, how they are used, who supports them, how are they remixed, syndicated, franchised, licensed, IP protected, etc) in a strategic businesses sense. At the core of this discussion is how 1.0 business models of the 20th century are very much being eroded, transformed, and frequently dethroned by the immense motive forces that lie in the pervasive, open networked systems we have today, which are taking us deeply into a very new place: the 2.0 era.

Ten Key Aspects of Web 2.0 Strategy

1. It's not about technology, it's about the changes it enables.  While technology is a close second (and ultimately makes 2.0 business models possible), the real discussion is about the disruptive new opportunities it creates.  Instead the discussion should be focused more around strategies such as harnessing millions of customers over the network to co-create products through peer production, engaging in mass customer self-service, customer communities, and open supply chains to thousands of ad hoc partners with open APIs. These are just some of the examples of using the network to create far richer and more profound results than could be created in the 1.0 era.  Don't get caught up in the technology of 2.0 at first other than to understand the business possibilities it affords.  Avoid technology-first discussions like the plague.  Premature monetization discussions around 2.0 are also to be avoided to early, they tend to have a negative impact on process if done too early.
2. The implications of 2.0 stands many traditional views on their head and so change takes more time than usual.  In the 2.0 world customers and partners have a much closer, more sustained relationship because of social interaction and tightly integrated online supply chains, to name just two reasons.  The shift of control from institutions to communities of users takes a lot of getting used to.  Just understanding how and why intellectual property is better covered by Creative Commons instead of copyright will take the legal department years (if not decades).  Each part of the organization will have its miniature 2.0 revolution.  These take time to happen and sort themselves out.  This means getting these new ideas into people's heads is one of the first steps...
3. Get the ideas, concepts, and vocabulary out into the organization and circulating.  If you're trying to affect 2.0 change in an organization, there's no better solution that exposing people to it.  Demographics can be a problem in this situation depending on the industry.  Younger workers tend to live and breath 2.0 while older workers may be aware of it but don't think it applies to them.  I use point education where change needs to happen either first or quickly and then internal communities that bring the discussion of change, innovation, and transformation to the entire organization.  Either way, learning and education around 2.0 are a vital trigger to begin change and should be started early and non-disruptively.
4. Existing management methods and conventional wisdom are a hard barrier to 2.0 strategy and transformation.  You don't have to get far into discussions about the Perpetual Beta or Product Development 2.0 before existing management methods seem outdated, inflexible, and ineffective.  This is one of the more difficult aspects of adopting 2.0 models and the implications is that we'll have to do a lot of rethinking how we manage businesses driven by 2.0 models, where the boundaries of organizations are less clear, the ownership is much more community-based, and the outcomes are far more diverse and spread out, making them less trackable, controllable, and directed.  Overhauling management practices and techniques will be a core activity in a 2.0 transformation and will be hard to achieve quickly enough due to the Innovator's Dilemma.
5. Avoiding external disruption is hard but managing self-imposed risk caused by 2.0 is easier.  The great fear than many businesses have is facing a fast-growth competitor that takes these ideas and either wrests away market share rapidly and aggressively or cuts them off at the pass with entirely new products.  YouTube did this to the broadcast and cable industry, which responded with Hulu.  Apple did this with iTunes to the recording industry and the blogosphere did the same to the newspaper industry.  Other industries are next likely including the financial services industry, real estate, and others.  Internally, however, risk management is still a challenge but is much more manageable.  The big implication for this is that starting internally first with things like Enterprise 2.0 initiatives and prediction markets to learn the ropes on how to deal with unexpected outcomes and results can help organizations climb the maturity curve.
6. Incubators and pilots projects can help create initial environments for success with 2.0 efforts.  Too much contact with the traditional support environment of an existing, primarily 1.0 organization makes it hard for 2.0 efforts to succeed; everything gets done in the traditional way instead of the new ways that are required.  The traditional tools, processes, and skills just aren't there or are just too slow and burdened with unnecessary overhead.  Creating dedicated incubators that are designed to use the strengths of the organization while being isolated from its weaknesses can help.  Incubators are at risk of becoming too isolated however, and won't inform or change the greater organization unless care is taken to roll the lessons and capability back in.
   
7. Irreversible decisions around 2.0 around topics such as brand, reputation, and corporate strategy can be delayed quite a while, and sometime forever. Most organizations get paralysis around change and transformation because of concerns around decisions that can't be reversed.  Concern over damaging the company's brand is one of the top issues I run into and it's a valid concern.  The good news is that many organizations are discovering they can safely leverage the advantages of their organization (such as their extensive customer base to drive initial growth of 2.0 engagement and adoption of new products and services) without dragging their brand into it whatsoever.  New 2.0 products from major companies are now often released under new brands entirely. This enables serious experimentation with 2.0 while taking little risk to the organization.
8. The technology competence organizations have today are inadequate for moving to 2.0.  This is key if you're a CTO or CIO today; your organization is almost certainly not ready to handle the development, management, scalability, identity, governance, and openness issues around 2.0.  If you're not sure, just ask your IT staff.  Examples include cloud computing, open APIs, mashups, rich user experiences, Web-Oriented-Architecture, community platforms, Enterprise 2.0, 2.0-era computing stacks like Rails and Django, are all disciplines that are considerable in their own right, of rapidly growing importance to organizations in the 2.0 era.  These are all likely to be things your staff needs to come up the learning curve on in significant ways and with the rate of change on the network what it is presently, falling behind is too easy to do.  Note: The existing technology landscape of most organizations will have to change as well which is where Web-Oriented Architecture (WOA) is getting quite a bit of attention today.  And the Web products themselves have moved far beyond the model of the Web page and most enterprises are very far behind.
9. The business side requires 2.0 competence as well.  This includes how to design, build, launch, market, support, and maintain 2.0 products and services as well as the ways that workers should use the tools and concepts to work together.  I recently suggested that learning how to be effective in working within and directing communities of workers/users/partners to accomplish large-scale outcomes will be a vital skill in the very near future.  All of this requires both a new perspective as well as a hard-headed effort at skill building and a re-orientation of existing work habits and processes.
10. Start small, think big.  We have discovered that the leverage the network can give us is almost unlimited.  It's ability to scale ideas, products, and communities of users as fast as they are able to is one of the aspects that makes it so attractive to business.  2.0 products tends to be very simple at heart, and though there is certainly challenges and complications growing, small ideas can become big very, very quickly.  Getting to the right solutions, not-overinvesting (which leads to complication and heavyweight management and processes) and letting customers and partners take the seeds of great ideas and run with them is what makes sudden success turn into a large-scale success.  On the Web, starting small, and thinking big can take you a long, long way.  Read more about network effects driven by architectures of participation .

Please share your ideas around what else is essential in a Web 2.0 strategy below.

The Web has an interesting property that those building Web applications and online businesses usually encounter soon after they first launch: It has its own unique and unforgiving rules for success and failure.  Appreciating them requires a certain level of understanding of the intrinsic nature of the Web and how it works.  Actually leveraging those rules requires an even deeper and more profound understanding of the Web. The challenge these days? The Web competency bar is climbing fast.

To drive the right decisions in what they do product designers, marketing teams, software architects, developers, strategy officers, and other key roles in today's generation of online businesses need to have a solid handle on an extensive array of Web topics.  This ranges from appreciating why plain old HTTP is so good at underpinning the Web to more sophisticated topics like modern application architecture, the latest in online user experiences, next generation computing models (grid/cloud/utility/SaaS/PaaS), cost-effective scalability, user identity, network effects, Jakob's Law, analytics, operations, user community, as well as the many compelling new distribution models that are nearly mandatory in the first release of most products. 

This extensive set of competencies is what's required nowadays to deliver a credible online product to a receptive user base and it has dramatic implications for both uptake and overall cost/time-to-market.  Worse, this body of knowledge has become extensive enough that many Web startups frequently fall far short of what they need to know in order to be successful with these far flung practice areas. 

Does this complex body of knowledge mean the era of the two-to-five person Web startup is coming to a close? Not at all, at least not yet. The productivity level of the latest tools and techniques remains almost astonishing though the level of knowledge required of these teams is creeping up and up.  And as we'll see, new models for product distribution are pushing the capability envelope of the typical Internet startup team to the point we may very well see the day soon that they won't have all the skills necessary to deliver a fully-scoped modern Web application.  It is also one reason why fewer and fewer Web startups have the goods to be all around hits out of the gate.

Certainly, varying depths in subject matter are required depending one's exact role in a Web business, but Web-oriented products are fundamentally shaped the vagaries of the network itself.  Tim O'Reilly himself still has the best quote on the subject: 'Winners and losers will be designated by who figures out how to use the network.' And as we'll see, the Web is driving the evolution of a major new generation of online distribution models.

Why Adopting New Distribution Models Is Crucial 

As an example of this, I've been tracking some of the latest discussions around the hot topic du jour in the Web world: Social networking applications.  Specifically, it's been interesting to watch the surprisingly low level of industry attention around the titanic competition brewing between social networking application formats from Web giants Facebook and Google.  Why is this?  Some might say it's because these applications still have largely unproven business models.  Others, like Nick O'Neill at the Social Times recently observed (rightly in my opinion) that the struggle may have to do with a deficit in understanding why these new types of Web applications are so important. Nick notes that these widget and social networking style models for packaging and distributing Web apps often 'have more eyeballs looking at their products than television channels have' and the challenge is that too many people just 'don’t know what any of this means', despite the major players divvying up the online pie for themselves.  With the size of these next generation distribution audiences, ignorance has an extremely painful price: failure to produce results and growth, poor engagement with the marketplace, and loss of market share.

An excellent summary of the truly massive, but largely underappreciated scale of these new Web application models was last week's TechCrunch piece on the progress of Google's OpenSocial, an increasingly successful model for creating portable social networking applications that will run on any OpenSocial-compliant site.  Erick Schonfeld reported that OpenSocial now has a total reach of an astonishing 350 million users and it will soon be 500 million.  There are over 4,500 OpenSocial apps today, a healthy number for the application format but a small drop in the bucket compared to the number of Web sites in the world. But the key is that these applications are integrated much deeper into the social fabric of an engaged audience, interjecting themselves into the daily personal and work habits of the 'captive' users of social sites and even have access to the personal habits and data of users of these sites.  Facebook's story is impressive as well with over 37,000 applications that have been installed over 700 million times.

And social networking applications are just one of many news ways that applications have to be packaged and distributed, yet far too many organizations persist in a very 1990s view of Web experiences, namely that Web sites themselves are the center of online product design.  Many even think that some of these other new distribution models are interesting but not part of their core online product.  Unfortunately, that's very much a parochial view in the present era.  Federated applications, atomized content and functionality, 3rd party product ecosystems through open APIs, and much more are required to establish a strong and resilient network effect which fends off competitors that are themselves bringing these potent new competencies to bear. 

 In fact, one of the things we emphasize over and over again in our conference workshops and in Web 2.0 University is that having a Web site is usually the least interesting things about new products.  Worse, it makes the customer have to find you amongst tens of millions of other sites.  Instead, these new models tend to focus on going to the customer, instead of making them come to you which is a much harder proposition. This can instantly give you the ability to reach millions of potential people with dramatically lower effort and cost, as long as you have something interesting to offer.

Unfortunately, the number of capable practitioners of these new distribution models remains relatively small compared to the large body of experts in traditional Web product development.  Demand is also low for these new skills as most organizations have been painfully slow to appreciate how much online product development has changed.  A quick search of the job aggregator SimplyHired tells the tale: Nearly a thousand Web designer positions are available while only 36 OpenSocial and 40 open API positions are open, for example.  This despite the the latter skills being able to project a product across the Web into hundreds of social sites or create an API that allows the product to be incorporated into countless other products for far less cost per customer than traditional methods.

The lesson here is that these new models still have a lot of fertile, unclaimed territory and many otherwise fierce competitors have not yet become fully aware of these new opportunities.  Get your piece of the pie while there's still time. 

I also find that the Web development industry has been slow to change, particularly outside the valley, and there is depressingly scarce information on how to deliver well on things like widgets, open APIs, social networking applications, and even syndication.  To help with this, I've put together a short primer and some good references for those that want to get started.

Because the good news is that there remains tremendous opportunity for growth and success -- for both startups and traditional businesses -- if they will actively begin incorporating these new product delivery models into their own online capabilities.

Overview of Online Product Delivery Models 

1. Web sites.  This the classic model for Web presence.  During the early Web, creating a Web site was just about the only option for engaging with those online (e-mail being the other.)  Most early Web sites were used for publishing and not for user participation or peer production.  These days, Web sites are still important, though by no means mandatory, and have their content syndicated via RSS and ATOM (pushing the content to where it's wanted), provide an access point to obtain widgets, and maintain user identity, and create communities of users.  Upshot: They've evolved a lot but Web sites are only part of an extensive set of capabilities that must be brought to bear in the Web 2.0 era.
2. Syndication. It took ten years for the Web community to figure out a workable syndication model.  Now RSS and ATOM are now the expected models used to distribute content off a single site and across the Web. Countless aggregation services now exist that make a site's information embedded in their services as well as a way to offer users a method for pulling information from a site and experienced in a means of their choosing, from Google Reader and Newsgator to the innovative Yahoo! Pipes.  Most sites still heavily underutilize syndication even for notifications and pushing out frequently changed information to draw attention to it much less the strategic ecosystem and integration opportunities it affords.
3. Web 2.0 applications.  You might argue that Web 2.0 itself is not a product distribution model but a set of design patterns and business models and that would be a true statement. However, in this context we're referring to the fact that Web 2.0 apps package up the 3rd major type of networked value: user participation.  Before then, Web sites and syndication primarily had only centrally produced content or functionality that they could expose over the network and offer to the marketplace.  In other words, user participation its purest form -- sometimes known as peer production --  ultimately results in products like Mechanical Turk and Predictify that provide direct networked access to user participation, but there are many fine gradations to this.  The bottom line, Web 2.0 applications plug the user into the network like never before and are a critical rung in the distribution ladder since it offers access to the largest set of content and information by harnessing collective intelligence.
4. Open APIs and Web services.  This is one of the most important long-term decisions most online businesses can make.  Offering an open API lets anyone take the online components of a business, from its data and functional capabilities to the users themselves, and makes them open and accessible over the Web to be incorporated into other products and services, sometimes in the form of mashups and sometimes in the form of entire online products.  Amazon, one of the first Web companies in existence and is hence far downrange in terms of the experience curve, has been using this distribution model with notable success recently.  So have hundreds of others.  The real challenge has been how foreign this model is to the original Web model and thus to the various management and development competencies in most organizations.  It's much more an a way to OEM a product and leverage the customers and investments of hundreds of other partners.  However, overall, it affords the potential for much larger business outcomes than could ever be created with point Web presence.  It's now considered a significant oversight not to have an open API available for the typical online product.
5. Web widgets.  Selecting parts of a Web site and it's data and packaging it up to make it run inside a portable, user distributable widget has been growing more and more popular over the last few years. For example, WidgetBox currently distributes 74,000 different kinds of Web widgets from its partners to over 1.2 million other sites.  Widgets lets users distribute a Web site to other places on the Web at no extra cost and it also creates an ecosystem effect, where other Web sites users become the users of the new site.  The YouTube badge is a notoriously well-known example of this that also helped drive the extraordinarily fast growth of the site.  Like APIs, widgets are now considered a mandatory must-have for new and existing online products. But unlike APIs where it's up to the API users, figuring out users want out of your site's widgets is still an art form.
6. Social networking applications.  Sometimes viewed as an extension of the Web widget model, social networking applications are applications designed to run inside of popular social networking environments and usually have capabilities that tap into and make use of the social graph information resident in a user's social network account.  This is an amazingly fast moving field as you can see from a recent post on the latest happenings on the OpenSocial blog, to the extent it's hard even for well-funded companies to keep up.  However, despite skepticism that large businesses can be built exclusively through a social networking application, it's become ever more essential for a site to make its capabilities accessible usable in these environments.  Not only will users help distribute online products in these formats to their contacts but it also increases the overall usage of the your application including participation and its consequently growth of a site's network effect.  While not yet considered mandatory for online products, the ease with which these social network applications can be created and the large numbers of users they make available makes it a smart distribution option for most Web businesses.  Like widgets, however, figuring out what users will find engaging in a social networking application featuring your online product takes some research and experimentation.  However, the results can be very rewarding and some social networking applications have millions of daily users.  See the Plaxo Pulse story on Mashable for the details of how OpenSocial drove a 5x improvement in traffic in only 3 weeks.
7. Semantic Web and Web 3.0. The Semantic Web, one of the original visions for the World Wide Web, has taken a while to arrive but it's beginning to look like it may hit critical mass in the next 12-24 months.  Combined with Web 3.0, which takes the architectures of participation at the core of Web 2.0 and drives it through a lens of Semantic Web capabilities.  The benefits can be profound and can greatly increase the value and leverage of information on the Web.  While this is very much not prime time yet, unlike #1-#6 above, it likely will be and smart organizations can get ahead of the learning curve and get an early market lead using these techniques.  For now, however, I recommend that most organizations focus on executing well on the first six items before tackling this and waiting for the technologies to finish emerging and maturing.

The list above should provide good guidance for starting move into the potent new models for distribution on the Web.  I'm seeing, however, that because of the major shifts in strategy and product design emphasis these techniques demand, most organizations take an inordinately long amount of time to become effective with them.  The lesson here: Start small now and build core competency.  Small investments now can pay off later in terms of valuable experience made from early experiments and pilots.  When done right,
these new distribution models can become the dominant channels that the world uses to interact with your business, like they already have with Amazon and Twitter.

I'll be talking about these and other strategic online product design topics in my upcoming Building Next Generation Web Apps Workshop at the inaugural Web 2.0 Expo 2008 NYC next month.  I'll have more details about this deep-dive session in an upcoming post.

While it's no longer quite so fashionable to label your Internet startup a 'Web 2.0' company these days, the popularity of the term remains extraordinarily high and is presently used today both far and wide in traditional media and social media.  The Google Trends graph in the figure to the right tells the overall story; global search interest in Web 2.0 is more popular than 'social media' and 'social networking' combined and by a significant margin.  About the only other strategic technology concept that has anywhere near the same volume of world-wide interest is service-oriented architecture (SOA), which as it turns out is also surprisingly closely related to Web 2.0.  Granted, Google Trends is not a scientific, 'bet-the-business' kind of source, but it's a pretty darn good barometer.

Even for someone who spends much time with Web 2.0 concepts, I was surprised at this and I carried out a little cross checking from other sources and they all show the same disparity: Web 2.0 is still far and away one of the most popular terms to describe the intrinsic nature of many new online applications and businesses.  This apparently highlights large scale demand for a broad enough term that rightly captures the innovations, new trends, and technologies that have emerged in the online space in the last few years.  Web 2.0 has fit this bill better than any other single meme including the read/write Web, Social Computing, the Social Web, and the New Internet, to name just a few alternatives (and conceptually incomplete) terms that have been suggested.

The only real problem with this is that term itself has sometimes devolved into a vague buzzword that is often substituted as a simple synonym for social software or rich user experience techniques such as Ajax.  Part of this is that the early investigation into Web 2.0 trends attempted to use it as a placeholder until the real underlying patterns were actually identified.  This work resulted in the famous Web 2.0 meme-map that began to put meat on the bones and ultimately resulted in the excellent Web 2.0 Principles and Best Practices by my good friend John Musser.  However, the lack of early specifics, though a brilliant move that allowed the right concepts to emerge from research into what was happening online, rather prescribing it blindly, also left a lasting impression of a vague, somewhat shapeless term for 'newness' in the online world to the extent that even Tim Berners-Lee himself was left doubting.

However, it does appear that we are now left with both a very popular term that also has an increasingly large body of serious work that puts tremendous substance behind it.  Academics such as Amy Shuen and her excellent Web 2.0: A Strategy Guide have produced enormous formal texts based on intensive research.  A quick search of Google Scholar shows that over 14,000 references can be found. So too does the popular Web 2.0 Expo conference series continue and it has been expanding in recent years to the East Coast, Europe, and Asia.  While the hype itself has largely dissipated and Gartner's 2008 Hype Cycle report says it's entering the trough of disillusionment, it also notes that 'it will emerge within two years to have transformational impact, as companies steadily gain more experience and success with both the technologies and the cultural implications.'  I could not agree more.

Web 2.0: The Concepts Spread to Other Fields 

I've previously covered what Web 2.0 means exactly and the virtual ink spilled on this often surprisingly complex subject is itself vast.  The Wikipedia definition of 'Web 2.0' remains one of the most popular entries on the site and the number of offshoots of the term has been a saga in itself, from the early days of Advertising 2.0, Law 2.0, Library 2.0 to the newer, (generally) widely accepted terms Enterprise 2.0 and Government 2.0.

For simplicity's sake, however, this is what we normally use to provide the most straightforward definitions of all things Web 2.0:

• Web 2.0 - The continuously changing, participatory Web with a focus on building collective intelligence on myriad devices and primarily servicing The Long Tail.
• Web 2.0 in the Enterprise - Web 2.0 as applied to business and not consumer activities.
• Enterprise 2.0 - The social, collaborative network with emergent behavior and structure. 
  

At this point there are some that like to invoke Buzzword Bingo at such seemingly gratuitously coining of new terms, but I personally find this a crucially important point: The global network of the Web itself, which is shaped continually by the endless participation of hundreds of millions of users around the clock, is no more than a reflection of those that shape it (which are then shaped themselves by it.)  That the principles of Web 2.0 cross all disciplines, types of business, types of government, languages, as well as types of people and culture has fostered an interesting phenomenon.  Namely, each of these topical areas are in the various stages of translating how Web 2.0 transforms and improves what they do, from architectures of participation and harnessing collective intelligence to radical decentralization (with cloud computing being the most interesting new example) and open service ecosystems. 

 This 'localization' of Web 2.0 into specific verticals appears to be a natural competitive response by those trying to incorporate the latest best practices and proven technique into their work.  In fact, I find that non-technologists and those whose professions are not spent in the world of software or in Internet businesses have a hard time incorporating, indeed translating, the Web 2.0 body of knowledge to their line of work.  So one by one, we can thank a largely self-appointed group of experts have taken the trouble to map the 2.0 works into the many aspects of the world that are steadily being remade by the increasingly pervasive presence of the Web.

And Web 2.0 isn't standing still, we certainly haven't figured out all the ways that we can leverage the network yet.  As we start thinking beyond Web 2.0 we begin considering where sensor-gathered information of every description, location-awareness (the iPhone will drive this like few other devices today), and the glimmerings of semantic capability, we can see that eventually Web 2.0 will -- like Web 1.0 -- evolve into something else in its own right. 

It took us almost 10 years to figure out how to begin to use the Web properly and it may take another 10 years from now before most of us are incorporating the lessons of web 2.0 deeply into how we run their businesses.  The result will be a transformed business and competitive landscape with products and services created and delivered in ways very unlike today (see my Web 2.0 predictions for 2008 for some details on this).  It's also clear that the long-term implications will go well beyond that, similar to the way that the telephone, television, and especially the printing press changed how information was created, who could access it, and how it was owned and distributed.  The parallels stop there since the deepest implications of 2.0 is a tremendous shift of control from the center of our networks to the edge. 

What other 2.0 memes are you tracking? Please put in comments below. 

A few days ago Amazon Web Services evangelist Jeff Barr released a graph (Figure 1 below) showing the growth of the bandwidth used by their global Web sites versus the bandwidth being consumed by their Web services.  It's eye opening because of the dramatic growth in bandwidth being consumed by their customers via their various non-visual, data-only Web services. The adoption of Amazon's Web services is currently driving more network activity than everything Amazon does through their traditional Web sites. This is one of the key lessons of the 2.0 era: that the ultimate end-game generally boils down whoever has the deepest and most potent network effect, which are more pronounced when you're data and software is being used from many other Web apps, instead of just your own.  

The graph below clearly shows that Amazon has the hockey stick growth that generally signifies a powerful, deep seated uptake by 3rd party platform users.  It also underscores the exponential results that comes from leveraging the intrinsic nature of open networks like the World-Wide Web to enable rapid growth.  This is spreading Amazon's platform to the far corners of the Internet in the way that Microsoft and IBM did so successfully with their own software platforms a generation ago, albeit in offline form.

Figure 1: Amazon's open Web APIs now consume more bandwidth than all their sites combined 

But what's also interesting is that it's taken nearly eight years for this result to occur for Amazon.  Amazon was a first generation adopter of Web services and it was almost certainly the biggest pioneer as well.  They offered Web services many years after their initial retail site launched and it's achieved much of its success because of the early years Amazon spent driving economies of scale and inefficiencies out of their operations and then flipped that expertise into cost-effective open Web services offered to their already vast customer base.

Amazon's early retail success in this way brings up a common question I get in my discussions with people trying to create competitive online products today.  The question is: 'Was Amazon unique because of it's unusually dominant industry lead early in the history of the Web? Or is this this kind of growth a common effect for those that open up their platforms online to the Global SOA?'

What is an open API?  Read about the motivations and techniques for adding open Web APIs to a site. 

The good news for startups is that the answer seems to be no, Amazon is not unique in their success of their APIs.  Certainly eBay has achieved a large measure of success with its open APIs, with over 60K registered developers and a large amount of API use.  Salesforce too has been relatively successful with their open platform, and Google has as well with it's increasingly robust set of API offerings.

But these are all larger, established Internet firms.  How much can an API offering help a startup drive its network effect and platform adoption in the marketplace?  The success of newer Web applications like Facebook, Twitter, and Friendfeed, which can be attributed to their success via the thousands of apps built for Facebook and dozens of applications for Twitter, which all capitalize on open APIs they offer (and indeed, are almost impossible without them) and drive the adoption of these apps. 

Figure 2: As new sites offer APIs closer to initial launch, stronger network effects can form earlier 

Twitter is believed to have 10 times the use through its API than through it's Web user interface and this is likely contributing to their highly publicized downtime lately as they attempt to struggle with fast growth.  The Web services approach completely changes where the focus of product design is, from the human/machine interface to the machine/machine interface.  This can be significant challenge for those who come from the traditional Web design world, where user interfaces where all that mattered.  The Web industry is changing rapidly in the face of these trends and building open platforms that are used from across the Web is the name of the game now instead of simple, point Web sites.

Sidebar: An approach called Web-Oriented Architecture (WOA) is an emerging best practice method for turning next-generation Web 2.0 applications into platforms.

The fast growth of newer Web platforms is key to adoption these days and most new entries in the marketplace have at least an RSS feed but usually much more as it becomes necessary to get developer adoption and 3rd party applications to drive traffic growth and adoption.  Big issues still abound around monetization strategies for Web APIs and the rapidly emerging mashup industry, but Amazon too has shown that it can be an entire line of business, even if the margins appear to be much smaller: despite enormous bandwidth growth, revenue per gigabit is beieved to be much smaller with Web services, certain to be of much interest as new Web apps get investment and go to market.  I'll explore how this is likely to play out over the next few years as Web sevices industry and cloud computing and Platform-as-a-Service (PaaS) matures and evolves.

What issues are you seeing with offering open APIs for your Web site or application?

It wasn't long ago that to be a credible participant in social media one only had to have a decent blog and keep it updated fairly regularly.  The rise of social media was an astonishing and novel enough development that most people still don't blog today, despite the enormous influence that blogging and other forms of social media continue to have.  One reason is that blogging takes time and takes some skill, both in writing and using blogging tools effectively. Another is the rise of online social networking sites like MySpace, Facebook, and Hi5, which add a personal dimension to online interaction that many find more rewarding and relevant for them.

But just like blogs made two-way conversations on the Web relatively cheap, easy, and quick for the masses compared to previous methods (such as personal Web sites), conversational models on the Web have continued to evolve.  Recently, microblogging and social aggregation platforms like Twitter and Friendfeed have emerged to offer alternative models that are compelling for a number of significant reasons.  For one, contributing to them doesn't take much time.  To achieve this, they either have radical limits on the amount of content that can be posted at a time (140 characters for Twitter), or they do the posting work for you and automatically centralize your social activity on other sites into a single feed, as in the case of Friendfeed.  They also tend to work very well on mobile devices -- an incredibly fast growing channel for experiencing anything on the Web these days -- as well scale conversation well, are extremely easy to use (even easier in general than blogs), and allow you to keep track of a large numbers of contacts socially.

And vitally, both Twitter and Friendfeed are open platforms, not just mere tools.  A key factor in their success is that they offer open APIs to allow others to add the features and capabilities that are missing for various specialty needs that would otherwise clutter the product for many users.  This creates a far richer overall feature set than any single product could offer on its own, while at the same time leveraging the innovation of the user community.  Blogs have been able to do something similar with badges, widgets, and plug-ins for some time but haven't seen the same directed results as we'll see below.

The sheer volume of 3rd party add-on activity for these platforms is impressive. Best-of-breed applications like Twhirl for Twitter (and now Friendfeed) and AlertThingy for Friendfeed extend these new social media experiences onto the desktop and provide real-time monitoring of your 'Twitterverse' or friend's feeds.  To get a full sense of the depth and scope of the innovation of the Twitter community, which is certainly still a niche compared to the blogosphere, though an increasingly impressive one, you have only to look at some of its more compelling 3rd party applications:

Common Twitter Applications 

• Summize - A power search engine for scanning Twitter conversations for information
• Twitter Charts - Detailed analytics of your Twitter activities along many different metrics
• TwitterFeed - Link your blog activity to Twitter
• TwitterGram - Post MP3s into your Twitter conversations
• TweetBurner - Combined with twurl.org, this application shows click through analytics on your Twitter links as well as overall Twitterverse stats
• TweetWheel - Analysis your Twitter account's social graph to understand the connections between your followers
• TwittEarth - A 3d animated globe that shows activity in the Twitter public timeline in near real-time
• Twitt(url)y - A link aggregator that reports on link activity within the Twitterverse, a sort of Techmeme for Twitter
• TwitSay - Use your phone to post to Twitter via a voice message
• TwitterSnooze - Turn off a chatty user temporarily and bring them back automatically later
• Twistori - An interesting dashboard that displays the expression of key memes from the Twitter public timeline, creating a sort of global collective intelligence
• Twubble - Many new Twitter users have trouble finding users to follower, this tool helps finds new contacts you might care about

This only a small list of the most popular Twitter applications and they don't even include the product offerings that are stand-alone in their own right, but work much better in conjunction with Twitter and Friendfeed, such as Brightkite and Natuba.

Understanding How Conversations Are Changing

The challenge today is that while the size of individual contributions to online conversations is getting smaller, the frequency of conversations are increasing on these new social media platforms. Making this point, Sarah Perez over at Read/Write Web wrote this morning that there are too many choices, and too much content. Users of the latest social media tools are far more likely to post several times a day, more likely dozens of times, each one forming a new conversational beachhead.  This can be overwhelming, but it can also be enormously stimulating and rewarding, as a form of collaboration, cross-pollination, brainstorming, serendipity, news gathering, and countless other activities provide one with a continuous connection to the broader world.

To get a handle on how people are using these next generation social media platforms, I ran an online survey this week which I pushed out across my Twitter followers, Friendfeed contacts, and a random sampling of my personal contacts via e-mail (the latter without much regard if they used these tools.) The results largely reflect many of the points above, but there were some interesting write-in results as well.

Here's how the Twitter survey results broke down:

Results Of This Week's Twitter/Friend Usage Survey

1. Do use Twitter or Friendfeed on a regular basis? (Multiple Answers Allowed): 96.1% Twitter, 25.2% Friendfeed, 3.9% Neither
2. What things do you like about Twitter, Friendfeed, or your write-in choice from question #1: (Multiple answers allowed):
   • My friends and/or colleagues use it. 65%
   • A good selection of 3rd party apps are available. 26.2%
   • I've built up a set of followers which I've come to know and with which I socialize. 42.7%
   • It's easy to use. 71.8%
   • It works well with my mobile devices when I'm on the go. 43.7%
   • Contributing doesn't require much time. 69.9%
   • Easy to socially interact with a large number of people. 59.2%
   • I can publicize my activities from other Web sites. 37.9%
   • Useful way to acquire news and information. 71.8%
   • It's better than e-mail for quick communication with contacts. 35.9%
   • Actually, I don't think Twitter or Friendfeed are that great. 4.9%
3. What do you like LEAST about Twitter, Friendfeed, or your write-in answer for #1: (Write-In. Representative Samples.)
   •  'Twitter lacks a feature to filter or an easy way to group.'
   • 'Twitter is yet another thing to keep up with, I much prefer the all-inclusive nature of Facebook.'
   • 'downtime'
   • 'I get a lot of noise, that is, useless information from people I'm following.'
   • 'Poor support for conversations. no threads, don't see other half if not following all involved.'
   • 'I've found it's hard to get some of my friends to adopt it.'
4. Do now, or are you planning to, use Twitter or Friendfeed for business purposes?
   • Yes. 66%
   • No. 12%
   • Considering it. 22%

One of the biggest surprises of this survey (there were 103 respondents total) was the amount of those who are thinking about using Twitter for business purposes.  Whether that's just expanding their personal brand or actually leveraging it for business collaboration, marketing, and other uses is hard to tell and will be the subject of a further survey.

Interestingly, in terms of being used as Enterprise 2.0 platforms by businesses, both Twitter and Friendfeed fly in the face of the underlying pull-based models that make social media more effective that traditional collaboration tools and it'll be interesting to see how well they will function in the workplace, something that seems a way off for most organizations right now.  And it may be that in the end that social networking for business platforms like Google's new Friend Connect may be the best answer. One thing is for sure, we'll find out soon as the living laboratory of the Web validates the best approaches.

Most other responses were within expected norms though it was interesting to see that, at least explicitly, users don't value 3rd party apps that much.  They are also using these social media tools as a replacement for traditional e-mail. But it was ease-of-use and the gathering of news and information which were listed as the aspects that respondents appreciated the most in these emerging platforms.  Which highlights that crowdsourcing of news via Twitter in particular continues to be a fascinating topic as a Paul Bradshaw wrote recently as he explored the news tweets coming out of China about the recent earthquake disaster. 

All of this highlight that the unintended uses and emergent outcomes that we continue to see with with these platforms is demonstrating that they have the power to achieve compelling results of a wide variety, from news and learning to staying in touch and achieving business goals.  But the biggest challenge will continue to be the challenge of scaling our attention and time, something that's always in finite quantity. The product creator that can successfully aggregate conversation without losing the social value will be the winner as these endless conversations spin around us, informing, educating and enriching us.

You can track me on Twitter at http://twitter.com/dhinchcliffe and on Friendfeed at http://friendfeed.com/dhinchcliffe.

Where do you see conversation online headed?  Will it be microplatforms like Twitter or SNS like Google Friend Connect? Or something else entirely? Note: Use wiki markup below to embed links. 

I've been spending a good amount of time the last several weeks getting ready for the workshop session I'll be giving at Web 2.0 Expo next week in San Francisco on building next-generation Web 2.0 applications.  What does 'next generation' mean compared to what we were doing a couple of years ago with Web 2.0? A good number of things as it turns out. 

We're currently seeing that newer Web applications are much more federated than in the past, meaning they're made of distributed parts instead of being just one app on a Web server at one domain and are increasingly leveraging external Web services and APIs.  We're also seeing Web app functionality being bundled up into user distributable components such as widgets, gadgets, badges, and SNS embedded apps.  Next generation Web apps are also much more social than in the past with features such as friends lists, activity streams, and aggregation from other social sites as well as using that information to really learn about your customer like Facebook does [Paul Buchheit.]  And new Web apps are leveraging powerful new development platforms like Ruby on Rails, grid environments like 3tera , or cloud computing platforms like Amazon's EC2 and Google App Engine (my comparison of the latter two is here on ZDNet.) And these are just three of the larger aspects of the many new things taking place in on the 'edge' of the Web today.

That's a lot of things to learn for those who want to build Web applications that offer competitive features and will cost effectively scale as apps get larger, while often using technology that's still fairly experimental.  And that's one of the big reasons we suggested this workshop to help get a snapshot of the current state of the industry to get up to speed on the latest.  So we're going to spend Tuesday afternoon at Expo going over the details of everything that's happening in the Web app development space to the fullest extent possible. 

And while I reserve the right to change things right up the very last moment, here's what I plan on covering next week in San Francisco:

We'll start by providing a detailed examination of the best methods for turning a Web application into an open platform to drive growth through the use of open Web APIs with REST, JSON, ATOM. The key success factors for the underpinning business models of open Web platforms including brief case studies will be presented. Designing for consumption in mashups and 3rd party Web apps will also be covered.  I'm planning to build a Ruby on Rails REST API during the session based on the positive experiences we had a few weeks ago with Rails 2.0.

The very latest rich user experience platforms will be explored including Ajax, Adobe’s AIR, Microsoft’s Silverlight, and Sun’s JavaFx with an eye towards how to take advantage of their individual strengths to create new, highly compelling user experiences not previously possible, including for the next generation of mobile devices.

This session will then look in detail at the latest in Web identity models with a focus on how to use openid and other popular Web single-sign on models to offer users the identity choices they’ll prefer in the near future. The cutting edge of social distribution channels will be explored through the latest field research in OpenSocial and Facebook application models and how best to package and distribute your Web application within popular and high volume social ecosystems and Web widgets. 

The second half of the workshop explores the architectures and cutting edge development models of Web 2.0 era applications circa 2008. The latest techniques for designing applications out of other pre-existing online platforms such as AWS, Google’s APIs, and many others will be given with specific examples for dramatically cutting the cost and time to market of modern Web applications. The latest in emergent architecture techniques, large-scale customer testing approaches, and rapid scalability methods (summary of these three here) will round out the workshop and finish with a informative survey of the latest productivity-oriented development platforms for creating highly effective Web applications including Ruby on Rails 2.0, Cake PHP, Groovy, Grails, and others.

And while I'll into more details about these in my session, here are some high level tips for building next generation Web 2.0 applications:

Tips for Building Next Generation Web 2.0 Applications 

• First, understand the basics of Web 2.0.  Here is a popular overview I wrote a little while back that has the essential design patterns of Web 2.0 as well as how they specifically plug into a viable business model.
• Assemble a development team that is willing to learn.  The market is moving at light speed at the moment and new models for designing, building, hosting, and distributing Web apps are emerging rapidly.  Because of this, it's fairly unlikely you'll be able to hire the folks that already have the skills you need, so the next best thing is hiring people who are passionate about and able to learn the latest new things quickly.
• Spend some time studying the competition.  It's definitely not polite to directly design replicate another company's Web app, but they'll do all sorts of things with their application that will give you new ideas and places to take your project that you never thought about. That doesn't mean you have to do exactly what they do, far from it.  But when you're playing on the Web, you're all playing in the same ecosystem and it's often surprising how you can affect each other.
• Really get to know your customers.  You might think they're consumers but they might really be small businesses or big enterprises.  All of the audience groups out there have specific needs and once you learn your demographic and who is actually using your applications, you can start offering them what they really need.  For example, here's what large enterprises are typically looking at doing with Web 2.0 applications.  It's a lot different from what consumers will generally do. Deeply understanding your customers (which you can watch live as they interact with your product) will make your product as successful as possible.  In fact, I call this the First Commandment of application development.
• Along the way, don't lose sight of the fundamentals of Web 2.0.  It's what makes your product especially potent and drives the core of the long-term value it generates. But it's easy to forget in the haze of Web design, feature-itis, testing, deployment, hosting, and scaling.  I'm not talking the surface gloss that most people are referring to with Web 2.0, I'm talking the serious stuff like Architectures of Participation, building a strong network effect, and capturing classes of data online.  Also read my Sixteen Ways essay as well as Product Development 2.0, they can help guide you enormously.
• Finally, use all the latest tools, technologies, apps, platforms and gain ground truth on what they can do.  There is no substitute for using things hands on and understanding what they are capable of.  Yes, this is time-consuming.  No, you can't skip it.  This is the special sauce that many entreprenuers fail at doing: Using Web 2.0-style apps in their personal and work life and getting their hands deep into the actual technologies.  Get to understand these things profoundly including how they work and their strengths and weaknesses.

I'll be at Web 2.0 Expo for most of the week and I'll be keeping everyone up to date on my Twitter feed , so please follow me if you want to keep up with the very latest.

What are you most interested in from a Web 2.0 application design perspective? Put your comments below and use wiki markup for links.

It's beginning to look like 2008 might be the year of the social aggregator as users begin to employ these emerging new tools to better manage and track their various online relationships, both personal and professional.  The introduction of these new Web applications, such as Friendfeed, Socialthing!, Spokeo, Second Brain, and Iminta, are making it easy for users to keep track of what their friends are doing online while simultaneously demonstrating that there are compelling alternatives to being social online without having to, say, actively maintain a Facebook account.  In fact, that's the very premise of this new type of social Web utility, which automatically tracks a user's public activity at sites around the Web including blogs, Flickr, Twitter, del.icio.us and so on, and creates a single convenient feed for others to consume and track.

I've been evaluating a number of these applications over the last few weeks and so far Friendfeed seems to be one of the best offerings in this space and also supports one of the widest array of online services, with Socialthing a close second.  Friendfeed currently monitors and aggregates one's social activity on 28 different services at the time of this writing, putting the result into one clean activity stream with a matching Atom feed.  While the latency on some of the services Friendfeed tracks isn't always great -- del.icio.us bookmarks seem to take a good long while to show up for example -- the integration ranges from the workable to the robust, with surprisingly good support for Twitter's hashtags for example.  Services you also might not have previously considered aggregating socially are also offered by Friendfeed including your Gmail status message, Netflix rental queue, and your LinkedIn activity.

However, a quick examination of Alexa traffic charts (partial sample below) shows there are no clear leaders in this emerging space that will soon be crowded with competition, if it isn't already.  Peter Cashmore at Mashable tracked at least 20 entries in this space mid-last year and so it's interesting to see how quickly Friendfeed has risen among the various players. Ease of use, visual elegance, and breadth of service tracking appears to be the competitive discriminator here, like it is with so many things in the Web 2.0 world. 

 

This morning Duncan Riley at TechCrunch covered the best ways to track Web 2.0 and he omitted social aggregators as something users should be taking advantage of, while explicitly including things like TechMeme and blog readers.  That's because social aggregators are far from being mainstream yet and the long term staying power of these individual Web applications aren't clear either, making it a challenge to decide where to 'move in'.  But increasingly -- as Robert Scoble did this week -- I'm finding that I'm checking my Friendfeed stream and not Facebook or Techmeme as much as I used to, and I suspect many others will as well as they find aggregated social activity streams the fullest and most convenient picture of their social network.  The egalitarian nature of social aggregators is also appealing at a time when many social networks are trying to put up as much of a walled garden as users will accept.

The wild cards for this space include major players such as Google or Facebook credibly adding social aggregation to their own offerings as well as a killer app mobile entry.  Open social networking standards such as Open Friend Format will also make this space interesting in the medium to long term.  Please tell us your favorite social aggregator below.

One of the hottest topics in the online world in the last couple of years has been the growth of social networking services such as Facebook and MySpace, as well as the addition of a social element to existing user experiences.  Despite riding several waves of hype, it's now clear that the social networking space will only get hotter in 2008 according to most watchers.  Social software has come fully into its own as of 2008 -- for all appearances permanently -- and understanding the reasons for this rapid rise as well as figuring out how to leverage it best is the job of everyone who wants to make the most of the Web 2.0 era.

Gaining a deeper insight to the social networking phenomenon, now exhibited by the tens of millions of users employing them globally on a daily basis for both personal and businesses uses, currently means understanding the fundamental unit of the social network, also one of the biggest new buzzphrases of the year: the social graph.  Fortunately, that's simple enough despite the term's oblique reference to graph theory, which it is heavily based upon.

Simply put, a social graph is a set of people, referred to as nodes, that are connected together by vertices -- better known as links or connections -- that reflect their social relationships.  You can see a conceptual social graph above, showing the typical distinction of social networks to reflect whether a connection with another person is direct or indirect.  For example, the popular business social networking service LinkedIn, uses this model and sorts a member's social graph into different degrees of separation, which you can see a typical example of below and taken from my LinkedIn profile:

 

Also becoming popular is the burgeoning field of social analytics, such as the Socalistics application in Facebook and the Interactive Friends Graph, though there are also commercial standalone products here or on the way for the enterprise and open Web spaces from companies like KnowNow and Bravadosoft.  The Interactive Friends Graph is a nice, simple example anyone can try on their own and you can see mine from Facebook below.  Hovering over nodes in the live version in your Facebook profile allows you to see who is connected to others in your network and begin to gain insight and understanding of the relationships in your network.

 

But what are the top issues one must understand about the social graph in 2008?  As I've seen social networks become common on corporate intranets and in daily use on the Web, some of the issues are rapidly becoming clear.  However, the full story will certainly continue to unfold for the next several years at least.  Here's what we're seeing at the moment:

Strategies and Issues for the Social Graph - Circa 2008

• The social graph is poised to replace the address book and contact list as the preferred organizing structure for personal and business relationships. This was one of my Web 2.0 predictions for 2008 and it won't fully come true for the majority of users for at least several years since there's such an installed base of traditional tools for managing relationship information.  What's the difference?  Social networks are usually opt-in, two-ways for one.  And they are social for another, meaning they tend to encourage communication and collaboration, such as through user profile event streams and status messages.  They also offer up and actively make use of the deeper insight into the full graph's social surface area beyond direct contacts, such as LinkedIn's introduction service.
• Ownership of the social graph is going to be a ground zero issue in 2008.  Robert Scoble's widely covered attempt recently to use Plaxo Pulse to export his 5,000 Facebook contacts recently got him banned temporarily from the service.  But as users begin to realize that the contact lists they are building using online Web tools might not be portable, this will become a growing concern, particularly since two-way opt-in makes a social graph more valuable (and accurate) but significantly harder to recreate on demand elsewhere. This takes us to our next subject...
  
• Many social networking services will adopt open data initiatives.  Both Google and Facebook recently showed support for DataPortability.org and Google has an interesting play in their OpenSocial initiative.  This is welcome news that will resolve some of the concerns around who owns the graph but interestingly, traditional corporations will be the slowest get this and will rarely let workers take their hard won social graphs and user profiles with them elsewhere as they move to new jobs.  Public social networking sites Web sites are leading the way here and this will only drive more business users to the open Web, where they at least have some control over their social graph.  Smart organizations will provide their workers with some form of open social graph support, lest they lose control completely as workers keep more and more of their graph in Facebook, LinkedIn, and Plaxo and not in prescribed relationship management tools.
• Attempts to monetize social graphs will drive interest in regulation and legislation.  Social networking is now a global Internet phenomenon and that the information contained within them is highly central to everyone's lives.  This will make everything from protecting children to individual privacy of social graphs a hot issue for some local and federal governments.  All it will take is one or two widely covered exploits to make this happen.  Expect the European Union and the U.S. government to begin seriously examining the issue this year with many other governments following suite.  Good citizenship of sites that manage social graphs will be essential to prevent excessive government involvement.
• The line is blurring between personal and business use of social graphs.  We're all rapidly getting one large social graph each already, with everyone we know in them.  Most public social networking sites do a poor job of separating different subgroups of our social networks, such as allowing pictures and status messages to only go to a specific subgroups (work messages to business, family message to family, friends messages to friend, etc.)  This actually works a little bit better in enterprise social networks, but not much, since it largely consists of a Contact Type field.  Segmentation of social graphs will be an increasingly requested feature by users struggling with their use.  The social graph management services that make this distinction and enable its leverage may do very well indeed.
• Open Web identity, which will ultimately form the global 'primary key' for social graph nodes, will not get anywhere soon.  This despite it being needed badly but the users of the Web have not yet felt compelled to demand it.  Data portability of social graphs will begin to drive adoption of user controlled Web identity, and hopefully government regulation will not.  See Dare Obasanjo's deep exploration of using openid to enable social graph interoperability as an example of what will need to happen, despite there being little incentive currently for sites to use other site's openids.
• Making social networking 'gardening' and administration easier will drive new innovations.  Most individual social graphs are primarily tended by hand today, although a growing number of products, such as Visible Path, do all the tedious work for you by watching your social interaction online such as through tight integration through e-mail and instant messaging, building a rich graph for you (even sending invitations) as you go about your daily social activities.  New innovations like these will make social graphs easier to maintain and richer in overall information while also driving adoption through ease of use.
• The optional two-way confirmation of a social graph link becoming standard.  Many social graph management platforms (Facebook and Linked for example) require confirmation from the other side of the connection before adding a person to your graph.  Sites like Spock, which make it optional, will ultimately be more practical for managing a social graph while still allowing discernment of two way confirmations, which tend to be more valuable and convey key information about the trust and real extent of a social relationship.
  
• Social networking fatigue will not set in as perceived constraints such as Dunbar's limit do not prove to be universal.  While there are many theories on how big a social graph can get before it become unmanageable and sees diminishing returns on growth (note that both Facebook and LinkedIn encourage ceilings), the fact is that the are many different purposes for a social graph, from data mining and historical research, to marketing and customer relationship management.  

What else is going to be key to dealing with the social graph in 2008?  Please leave in comments below and I'll update this post with any good submissions.

It's the first work day of the new year and I thought I'd take some time to offer up my predictions for what will happen on the leading edge of the Internet this year.  2007 saw Web 2.0 -- defined here as the pervasive two-way Web used for social media, mashups, user-powered Web applications, and social networking -- go far more mainstream than it had in 2006.  Web 2.0 poster children like MySpace, Facebook, and YouTube pushed their way into the top 10 Web sites globally and stayed there for virtually all of 2007.  Fresh, new Internet startups were created by the hundreds (even thousands, if you count the innumerable garage and bedroom attempts) last year and that trend isn't going to stop any time soon and the reason is fairly obvious: The Web is simply the best place to create an incredibly scalable business for the least possible investment and effort. 

However, that's not to say that it's easy to be successful online.  It's not, and the history of the Internet startup arena is littered with failures large and small, and many -- even most -- startups will inevitably succumb if they don't provide a fairly compelling offering to the users of the Web.  But fortunately for those that get the right mix of capabilities and user engagement in their online products, the upside can be nearly limitless.  This fundamental fact helped drive the whole conception of Web 2.0: A new set of models and patterns creating Web sites and applications that looked at the best practices that actually worked from the success stories of the early Web.  My point here is that the Web itself is in a state of perpetual evolution and we are all still learning a great deal all the time about what works and what doesn't and the industry tries innovative new ideas all the time.  In this way, 2008 will continue to be a fascinating year as we see what history's largest ever business laboratory and incubator will turn out for us.

We are however assuredly seeing the maturation of the Web 2.0 industry, with many of the less successful online product plays falling by the wayside from first and second Web 2.0 wave as infamously tracked by Michael Arrington's Web 2.0 Deadpool, with only a few meteoric stars rising to the top.  The good news: That doesn't mean there won't be many exciting and innovative new things happening online this year, if you only know where to look.

Here's my take on what we will see happen in 2008 in the Web 2.0 arena:

Web 2.0 Predictions for 2008 

• Open APIs finally go beyond free as successful business models emerge. Sites like Twitter are finding that their APIs get ten times the use of the site itself (Web 2.0 principle: A platform beats an application every time), but monetizing them is a challenge for all but a few major player such as Amazon.  While you can charge for each transaction across the API boundary, that isn't appropriate for many types of API uses.  Some have speculated that Twitter's API usage is making them the middle-man, like the cable companies are with broadband, but with no reasonable way to charge for API usage that typical users would accept.  Companies will continue to experiment with techniques such as injecting ads in the API data to requiring a small yearly fee to open an API for an individual user so they can use apps built for it. However, at least one major new API monetization model will emerge in 2008 that will prove to have long term legs.  My bet: The costs will increasingly be bundled into a Web 2.0 application's subscription fee or other business model, even if they use an API of the user's preference, such as Amazon's S3.  This would require billing support from API vendors to chargeback for excessive use by a customer but it would work.

• Rich Internet Application (RIA) platforms such as Adobe AIR and Microsoft's Silverlight get major traction as the development of non-trivial Web applications in Ajax remains difficult and time-consuming.  While Ajax is made from 100% open Web standards, it was never explicitly designed for the job of creating rich user experiences and it's proven tough going for many companies trying to create next generation Web experiences in Ajax.  Adobe and Microsoft have been making enormous investments in browser plug-ins and supporting development tools that will change the way the Web will look in 2008 and beyond.  These two platforms will be huge successes this year, despite the many challenges that RIA platforms face such as supporting page view-based business models, analytics, accessibility, network effects, link structure, search engine optimzation (SEO) and more.
• Google's product strategy begins to coalesce into a mostly coherent picture, though a few big pieces won't fit into the puzzle.  While appearing to overextend itself into everything from online office application, mobile phone platforms, energy, and health, some of it will begin to make sense as the missing pieces begin to emerge next year.  Look for a strategy that combines a long-term vision to integrate enormous user reach (online, mobile, SNS) as well as function (software apps and utility capabilities such as search and location) and business (advertising)  into an interlocking platform play of a scope and breadth that will, pound for pound, out maneuver the vast majority of their competition.  Disclaimer: I am a Google shareholder.
• The Web 2.0 industry consolidates as it begins to mature.  This has been covered extensively on Mashable and John Battelle's 2008 prediction list so I don't need to repeat their outlooks, which I generally agree with.  Most startups, as in any generation, will fall by the wayside and a few major success stories will emerge.  Mergers and acquisitions will ensue. The next generation will begin, and so on.  The reality is that most new Web apps are still mostly Web 1.0.  We still have a long way to go before Web 2.0 design patterns are standard fare but Web 3.0 (whatever that turns out to be) will come upon us while that's still happening.  2008 will see a lot of old Web 2.0 faces be acquired or leave the scene entirely.
• End-user mashups will be a reality but adoption will be slow for most of the year as users take time coming to grips with the possibilities and mindset.  A little while back I wrote a detailed list of reasons why end-user mashups wouldn't happen in a big way in 2007.  Since then, it looks like only a couple of those reasons will be addressed in 2008.  Despite this, we'll see mashup platforms being rolled out by IT departments and high-functioning businesses as a significantly better and cheaper way to solve many problems by remixing the immense pool of content and functionality on the Web and in our organizations.  The average user will need time for this potential to be appreciated and understood but we'll see the first significant creation of end-user assembled Web applications in 2008.
• The Web widget format wars will ensue as Google Gadgets/OpenSocial takes on just about everyone else.  No one will win yet.  2007 was the year of the Do-It-Yourself era when it comes to users creating their own experiences out of the Web, often by just pulling off the parts of a Web site they liked and sharing it with others in their blogs and user profiles.  To embrace this demand, almost all major Web sites currently offer their sites in modular chunks known as widgets, or if you're Google or Microsoft, gadgets that their users can distribute.  However, like many aspects of Web 2.0, Web widgets are an emergent phenomenon with no large company or standards organization having created it up front with lots of engineering and funding.  As a result, there are many different ways to design and offer a Web widget with Google taking the clear lead at the moment with well over 30,000 different Gadgets currently being offered.  Throw in SNS widget/app platforms such as Facebook applications and OpenSocial and you have a recipe for fragmentation and an increasing to do list for Web sites which want to participate in what is a growing and often captive ecosystem of users controlled by each format's backer.  No consensus will be reached by the Web industry in 2008 but many solutions will be proposed, such as the W3C's Widget spec.
• Page view 'inventories' for online advertising continues to fall short of demand, even if an economic downturn takes place.  The well regarded McKinsey & Company predicted last year that advertising will actually have fairly significant growth challenges for the next five years from high demand and lack of maturity in the management of online advertising through traditional outlets.  My personal take: I've seen enough pent-up demand that I don't think even an economic downtown will noticeable affect the fortunes of online adveritising for the foreseeable future.
• Web-based Software as a service (SaaS), aka Office 2.0, continues to encounter serious challenges but grows at a record pace anyway.  Offline access to applications and data remains one of the biggest challenges to true Web-based software, but Google Gears and offerings from firms like Etelos are offering more and more options to make Web apps work offline (albeit with reductions in functionality).  Other challenges include the cumulative drag of paying a periodic subscription fee for access to software as well security and overall capability.  Despite this, positive aspects of SaaS will continue to prevail and 2008 is looking to be the biggest SaaS year yet.
• A wave of new killer mobile Web applications (and their startups) appear, spurred by the iPhone Software Development Kit (SDK) and ever more untethered workers.  Twitter was likely just the first in an era of fundamentally network-oriented applications with communications and collaboration at their design core.  The release of the iPhone last year proved that Web apps could be nearly as functional and pleasing as desktop apps.  The coming iPhone SDK, which will let anyone build iPhone software legally, will help usher in a new era of useful new consumer and business mobile applications, many which will sport Web 2.0 capabilities or even be fundamentally Web 2.0 based, such as route capturing software and automatic traffic tracking, particularly as more mobile devices add GPS capability in 2008.
• The first Android-powered phones will fail to impress and a decent, though not spectacular, iPhone upgrade keeps Apple ahead of the industry.  Google's widely covered Android platform will experience the usual beta/1.0 issues, particularly since one company doesn't have control over the entire product development process of Android phones.  Expect a somewhat rocky second half of '08 for Android while Apple maintains its market lead with what is still the most Web-friendly communications device yet created by releasing a solid upgrade of the iPhone this year, perhaps even twice.  Mobile Web 2.0 apps will continue to get very popular in 2008.
• Social media begins to grow up, leading to the first significant onset of Web 2.0 versions of talent agents, production companies, and other supply/demand enablers.  Blogs and other forms of social media such as backyard produced YouTube videos let anyone reach out to the entire audience of the Web at the cost of nothing more than a little bit of their time.  Despite the hugely democratizing effect this is having in the media world, the new online stars of the Web 2.0 still need professional help to maximize their opportunities and potential.  While this has been going on for a while with media companies cultivating paid bloggers and other forms of leveraging social media, expect that the social media phenomenon will being to create its own cottage industry of agents that can help the talented reach the Web mot effectively, for a cut of the action of course.  On the other side, production companies will form to give rising stars the resources they need to succeed.  We'll see a spate of new companies forming around this growing need in 2008, as traditional companies in this space continue to struggle with the medium.
• Leading social networking sites MySpace and Facebook continue to maintain their traffic but struggle to ignite significant revenue growth. Facebook's widely covered struggles late last year with the business model of its Beacon product is somewhat indicative of the entire Web 2.0 era: Incredible levels of participation with serious challenges to leveraging said participation due to privacy, governance, ownership, copyright, and other issues.  Make no mistake, however, these issues will be solved given the massive global stake in a successful outcome but it'll take at least through 2008 to do it.
• The Web moves into the living room as sites like Hulu and others make it practical and rewarding to participate on the Web using a large screen for entertainment.  Digital convergence in the main room of our homes has been in progress for a half-decade or more.  I'm a little reluctant to call it but I have definitely noticed a sharp uptick in the people I know starting to use the Web on the big screen.  New Web apps are emerging to make it popular and mainstream, and in 2008, will see the first big major uptake of Web usage -- with rich media apps in particular -- in our living rooms.
• The first generation of pure Web 2.0 auteurs emerge, creating social media and user-centric online experiences that are highly imaginative and popular, but difficult to access for the non-digitally literate.  The first generation of users whose most formative years were primarily spent in the Web 2.0 era are beginning to reach the age where they will become significant creative forces in their own right.  As the Web has become easy enough for semi-technical people to create nearly any experience they wish, expect that a generation of youth who consider the Web as natural a medium as the air they breath will begin to generate not just content but the next aspects of the Web itself.  While we continue to hold up movie directors, authors, TV production firms, and commercial Internet companies as the creators of most of the common large-scale group experiences we have, expect that Web 2.0 will impose its egalitarian influences here as well.  I predict we'll see an initial handful of Web 2.0 auteurs emerge that will offer large-scale Web-based 'experiences' that will not only redefine the notion of the Web site itself but will be widely used as well.   I also expect that many of them will come from developing nations or from other unexpected locations and less from the United States and Europe.
• Update: Ownership of data contributed to Web 2.0 sites becomes a growing public relations issue, though the average user won't care much this year.  I added this because the growing brouhaha about Robert Scoble's blocked Facebook account reminded me that we'll continue see many sites attempt to control the data they receive from users in a very Web 1.0 way.  This is somewhat surprising given it's 2008 and we've learned these lessons in the industry the hard way already.  However, it's entirely correct that Web sites should maintain control over their valuable and hard to recreate data.  A good example is how YouTube jealously protects its videos and doesn't let you download them, only view them on the site or through the badge.  Yet the often contrarian nature of the Web sometimes requires the opposite of an action to get the desired effect.  In this case, it turns out that the more control you give up, the more value you tend to get back.  Sites that lock users in, prevent them from having the experiences they want, and exert excessive and unfair control, will lose in the end.  See DataPortability.org and the GraphSync project, which aims to enable the open movement of a user's social graph, as examples of where all this is headed. 

Update: TechCrunch covers JP Morgan's bullish predictions for the Web business in 2008.

Where do you think the Web will go in 2008? Please leave your take in comments below.

I've spent the last few days keeping track of the seemingly endless stream of news and blog coverage about Google's new OpenSocial model for social networking applications.  OpenSocial has been described by some as Google's industry 'chess move' to outmaneuver and corner Facebook. This is fascinating set of developments to watch since Google's own growing social networking platform, Orkut, was eclipsed by Facebook in terms of overall traffic back in September.

Unless you've been hiding under a rock lately, you know that Facebook is presently the industry darling in social networking, having largely pushed MySpace off the industry's stage, as it seems to offer a more compelling model for social interaction to users overall.  Just as importantly, Facebook also lets any other company that wants to join in party do so by building 3rd party Facebook applications, of which over 7,100 now exist, making Facebook increasingly rich in functionality and content by leveraging the creative capacity at the edge of the Web.  In the Web 2.0 era (and in all computing eras before), the central truism is that a platform beats an application every time. This applies here with a vengeance and MySpace and other social networking sites have suddenly rushed to embrace openness and 3rd party widgets and gadgets to such an extent that MySpace has thrown in with Google on OpenSocial.

So the damage is done and in the fickle world of online social networking, Facebook currently has the upper hand.  This demonstrates yet again a powerful but counterintuitive aspect of networked software: the more control you give away, the more value you can get back.

Read my ZDNet coverage on how Facebook got ready to overtake MySpace and the challenges of setting up shop inside in Facebook.

However, much of the blogging around OpenSocial would have you believe that has Google now trounced the competition with a strategic move that counters Facebook's open SNS platform move with an open SNS application model that can work everywhere else too.  At least, that is, the other social networking sites that support OpenSocial's API.

But as Don Dodge noted in his OpenSocial coverage this isn't going to stop developers from building apps natively for Facebook any time soon and will have little practical effect on existing Facebook users for quite a while.  Not to mention the rest of the Web, since not even a single real OpenSocial application yet exists.

That's not to say however that OpenSocial doesn't have its advantages.  Joe Kraus, a Director of Product Management at Google, wrote today on the Official Google blog that OpenSocial will make life easier for developers 'because it makes it easier for them to focus on making their web apps better; they get lots of distribution with a lot less work. It's good for websites, because they can tap into the creativity of the largest possible developer community (and no longer have to compete with one another for developer attention). And finally, it's good for users, because they get more applications in more places.'

So, despite the early beginnings, does OpenSocial make sense from the production side of social networking applications?  It still remains to be seen, despite the enormous amount of early partner support for it, if the consumption side in terms of these kinds of applications really generates value.  Most of the applications on Facebook provide so little actual utility that they are barely worth installing.  While making these mini-apps portable between social networking sites is convenient -- and it probably will appreciably increase the total number of available social applications --  it's really people and the network effect they represent for a given social networking site that makes the site truly valuable.  In other words, if my friends and colleagues aren't on the social networking site I use, then that site is of little or no use to me, even if I can take my apps with me.

It'll be interesting to see what ultimately happens to OpenSocial.  I suspect it will actually see fairly good uptake since it's based on the highly successful Google Gadgets model, for which over 23,000 different Gadgets presently exist.  But will it change the playing field in the social networking wars? Probably not as much as a federated social identity would.  Federated social identity could potentially let you exist and participate simultaneously in all the social networks you wanted to at once using one set of social metadata you control.  That's probably a lot closer to the Facebook killer that so many are looking for and things like openid are bring that world closer to reality all the time.

In the meantime, here's the six things you absolutely have to know about OpenSocial to have an opinion about it:

6 Essential Things You Need To Know About Google's OpenSocial

1. OpenSocial only offers the lowest common denominator, not the full richness of each social networking platform.  While application developers can create apps using the OpenSocial model and they will be able to run on dozens of different social networking sites, OpenSocial can't help you leverage the full capabilities of the site it runs on.  Social networking site APIs aren't anywhere as complex as say, the Windows APIs, but we've seen this before with platforms such as Java, where the development model can't support the full capabilities of the underlying operating systems.  Like Java, write once, test everywhere is the name of the game for OpenSocial and while economies in this model certainly exist, a single universal widget model tends to discourage product differentiation in favor of broad distribution.  This means to get at the full richness of the underlying platform and create a competitive product, you have do custom coding for that site and you've just broken the reason to use a common application model.
2. OpenSocial is largely based on open standards and there's only minor developer lock-in.  Overall, it actually seems pretty safe to do a lot of your social application development using OpenSocial.  It uses the essential browser open standards of XML, HTML, Javascript, and the data formats are all ATOM and RESTful/WOA.  You can even host Flash content and functionality inside the OpenSocial application as long as you don't break the rules.  Finally, most of the really popular development platforms, including Ruby on Rails, can support the server-side API.  All in all, Google seems to have stuck to a fairly open and non-proprietary model including avoiding crufty proprietary markup.  OpenSocial documentation and sample code all uses the Creative Commons licensing and Apache 2.0, and the OpenSocial FAQ says everything will be open sourced at some point.  Kudos for this open stance, Google.
3. OpenSocial is a real doorway to social networking data portability as well as potential security holes. A site that supports OpenSocial applications provides that application with all the people data in that user's account.  Their own info as well as their friends.  This can be used to export user's social data from sites that don't support themselves directly and it could even be used to knit together a person's social data across other social sites that support OpenSocial, with properly designed 3rd party apps.  But it also opens the door to security problems and expect to see that security, cross-site scripting, and exploits become an issue over time, as it always does when platforms open up to the rest of the world. Update: Michael Arrington has reported that the first OpenSocial app has now been hacked.
4. OpenSocial is simple and straightforward but also capable of developing full-blown, rich Internet applications.  And without server-side infrastructure.  Developers can simply innovate with a few bits of markup and procedural code and drop it into the OpenSocial ecosystem and leverage the massive audiences and scalable infrastructure of OpenSocial compliant sites.  OpenSocial even supports powerful interactive Web user interface models like Ajax explicitly.  Like we saw last year, with the new productivity-oriented Web development platforms, this will change what's possible while also creating mountains and mountains of relatively useless, uninteresting apps amongst a few real gems.  But a lot more wildflowers will bloom on the OpenSocial landscape and some will likely rise up and show us how useful these applications can be.
5. OpenSocial is from Google and excessive philanthropy should not be expected.  Google almost certainly thinks OpenSocial will ultimately be very good for Google, if not outright bad for a few others (probably Facebook).  While the openness is encouraging, if OpenSocial is successful, Google has a plan to make that success work for it. Those plans may not always be to the benefit of everyone playing under the OpenSocial umbrella.  User beware.
6. A new era in competency in social software is being ushered in by models like OpenSocial.  A lot more social applications are being created because of open social platforms have become so popular.  But building successful social applications is a lot different prospect from building traditional business and consumer applications.  Expect that many developers and software designers will fail to build applications successfully until we learn that a different focus and way of thinking is required.  I've written before about the basic rules for building good social applications, but these are just the beginning.  Understanding people is the key to building effective social networking applications, and that is often the hardest thing for us in an industry obsessed with connecting with each other via 1s and 0s.

What else do we need to know about Google's OpenSocial?  Put your ideas in comments below or drop me a line at dion@hinchcliffeandco.com.

Going to Web 2.0 Expo Berlin?  I'll be there November 5th and 6th giving two sessions (What is Web 2.0 and The Rise of Widgets) as well as on the show floor at the Reply booth, our European partners for Web 2.0 University.