Thursday, April 06, 2006

Hippies, Open Source and Web 2.0

I listened to an interesting episode of Inside the Net hosted by Amber MacArthur & Leo Laporte interviewing Brian Oberkirch and Alexander Muse from Big In Japan. Most of the time was spent reviewing Big In Japan's products, which sounded pretty cool; however, the most interesting part for me was a discussion about the differences in the dot-com era and the current web 2.0 craze.

During the dot-com bubble, money was king. The entire technology industry was obsessed with stock prices, and we spent an inordinate amount of time talking about IPOs, venture capital investments, and exit strategies.

This time around in the web 2.0 craze, the industry is behaving completely differently. Money is still important (we all need to pay our bills), but people do not seem quite as obsessed with money. The current web 2.0 environment is less about closely guarding your business model and more about being open: open source software, open APIs, mashups, and more. The web 2.0 culture seems to be about sharing and doing things that we love doing. Leo Laporte compared the current environment of cooperation, harmony, and altruism to the hippie culture of the 60s.

I think that open source has influenced the current web 2.0 culture. Open source has always been about sharing the source code to provide an opportunity to customize it to fit a particular need. Similarly, the web 2.0 environment is about opening up your data and allowing it to be used freely in creative ways through mashups or other mechanisms. Google Maps is one of the leading examples of this phenomenon.

The open source business models are also starting to mature and are beginning to demonstrate that companies can make money with open source software, which means that people can do something altruistic that they love doing while still making enough money to pay the bills. IBM is an interesting example; they sponsor developers who contribute to the Linux kernel and they contribute code through initiatives like Eclipse knowing that they will be able to sell related services, up-sell customers to more expensive products, and sell related hardware because of their work will open source. Web 2.0 seems to be learning from the mistakes and successes of open source with similar business models. For example, Big In Japan uses consulting and up-sell business models to support the tools that they provide free of charge.

Web 2.0 and open source companies will be interesting to watch over the next few years to see how the business models evolve to understand how sustainable these models are over the long term.

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