Sustaining innovation in services.
It’s been a long time since I did any programming so I’m pretty sure I don’t understand most of what’s being said in this presentation, but it definitely got me thinking. In particular, the example of an Excel spreadsheet mashup for Oakland crime stats reminded me again of how amazing services can be created through creative combinations of existing data and services.
More and more data goes online everyday, just yesterday NPR did a segment about the city of San Francisco putting open parking meters online. And, with the pace of Web 2.0 startups still showing signs of growth, users are likely to be presented with an embarrassment of riches in terms of useful new services.
However, while all of this innovation in technology progresses, there’s been very little innovation in business models. In particular, advertising remains the primary revenue stream for most of the Web 2.0 companies out there. Given the fact that advertising returns on social media properties remain fairly disappointing, it doesn’t appear that there will be enough ad money to pay for all this innovation.
Instead of businesses springing up simply to offer a service, services should become a part of how other businesses drive revenue. For example it’s easy to see how it might make sense for Starbucks to buy a service like Twitter and create a location-based mashup like Twinkle which also contained Starbucks location information. Assuming Starbucks looked at the cost as a marketing expense, they could possibly justify running it ad free.
For brands like Starbucks (and others) advertising on social media properties instead of simply creating and offering them feels like two steps removed. Of course, this point-of-view may seem self-serving coming from us but I think that an advertising-supported model won’t be sufficient to sustain the kind of innovation that advances in technology are creating.