How to really make money with Web 2.0

How to really make money with Web 2.0

Summary: The launch of Amazon DevPay hasn't had the attention it deserves. DevPay will have the same incredible impact on startup economics for online applications as Google AdSense has had for online content.

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One of the most significant announcements made around the turn of the year attracted very little attention at the time, despite its huge import for the way on-demand applications get created and marketed. I'm talking about Amazon DevPay. Silicon Valley's online chatterati didn't give it much of a second glance, but some of the developers I've been meeting with on my current visit here are digesting the implications with a growing sense of delight and awe.

Amazon Web Services logoIn essence, DevPay matters to online applications because it will have the same incredible impact on startup economics as Google AdSense has had for online content. Anyone can start up a blog or an information site on the Web today, and if they attract a bit of traffic — especially if that traffic is interested in certain valuable keywords — then they can easily cover the costs of operating the website. The most successful make a substantial profit as well, even a decent living. DevPay enables developers to charge for their online applications with the same kind of ease. It does depend on buyers actually making payment, so there's more friction than in the AdSense model. But on the other hand, it's easier to offer value with an application than it is just with content. And a look back at the history of content monetization reveals that, even before AdSense took off, some people were already making big profits from selling content online. DevPay brings online applications to the same stage.

DevPay hasn't attracted a lot of commentary because the Web 2.0 crowd is still focused on trying to grow big and then get VC funded, rather than simply earning a living from revenue that can be collected today. The trouble with get-big-and-monetize-later as a strategy is that most of its proponents are doomed to fail, because by definition only a handful will reach the top of the pile. The VC route is the one that gets all the headlines because that's where the deals are done, but in reality it's not much better than pyramid economics, encouraging people to work themselves into the ground for rewards that, in many cases, turn out to be devastatingly trivial, even in the biggest deals.

While the crowd is chasing the illusion of VC and buyout riches, a groundswell of smart developers are going to use DevPay to make money under the radar screen — the same way it's always happened on the Web. Look at the history of content and you'll see how it typically goes. The advent of hosted ecommerce services and the PDF file format in the late 1990s sparked a cottage industry of ebook publishers offering a catalog of how-to titles. None of these turned into multi-million dollar buy-outs or IPOs, but the most successful of them brought in tens of thousands of dollars a month. A second generation of content providers built websites that targeted the revenue opportunities introduced by Google AdSense and other programs such as Chitika. While the crowd chased VC-fueled fame and glory, hundreds of more pragmatic individuals built information sites designed to maximize revenue from content-related ads, again generating prosperous incomes for themselves.

DevPay will create a new generation of those never-told success stories. It's a hosted commerce engine designed to make money from applications that run on Amazon's Web Services infrastructure. Here's how Amazon described the service in its developer newsletter earlier this month:

"Amazon DevPay removes the pain of having to create or manage your own order pipeline or billing system. It allows you to quickly sign up customers, automatically meter their usage of AWS services, have Amazon bill them based on pricing you set, and collect payments. If you have an Amazon EC2 AMI or Amazon S3-based application for which you'd like to charge, please browse through the resources below, and read about companies already using Amazon DevPay."

The only missing element is support for the newly introduced SimpleDB, which DevPay doesn't yet meter. Once that falls into place, there's going to be a massively disruptive new development platform out there on the Web, which will generate enormous profits (at the same time as undercutting conventional software pricing) for those developers smart enough to stand aside from the crowd.

The way to really make money with Web 2.0 is by selling applications that help individuals and businesses either save money, save time or become more profitable. People are prepared to pay real money for that kind of utility, and with the advent of DevPay, it's now really easy for smart developers to collect those revenues.

Topics: Software Development, Amazon, Browser

Phil Wainewright

About Phil Wainewright

Since 1998, Phil Wainewright has been a thought leader in cloud computing as a blogger, analyst and consultant.

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14 comments
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  • DevPay vs PayPal

    How is DevPay different from PayPal?
    shagbark
    • DevPay vs PayPal

      PayPal does not monitor usage of your web services used by customers on amazon's web services platforms
      joegoodfellow
      • ahhhhhh...so it's Amazon that makes money!

        Remind me to stay well away from any DevPay application then.

        Not that it will take all that much encouragement, mind. Web 2 is still largely vapour and most of it's promises are things that I'm not all that interested in.

        Those Web 2.0 sites I've visted are, by and large, poorly designed slow and more annoying than helpful. Oddly enough, the ones that work well, though I still find them annoying, are open source so this won't help them.

        Web 2.0 is still what it always has been a buzz word and nothing else. As a development scheme or something that a surfer would find at all useful it's a dead end.

        ttfn

        John
        TtfnJohn
  • RE: How to really make money with Web 2.0

    where do I sign up?
    wdobni
  • RE: How to really make money with Web 2.0

    Tell me, I want in on it!
    dblak305
  • RE: How to really make money with Web 2.0

    Tell me, I want in on it! dblak305@earthlink.net
    dblak305
  • what does this do that

    the merchant side of GoogleCheckout doesn't?
    A.Lizard
  • RE: How to really make money with Web 2.0

    This sounds like one of those "You have to have it." promotions for Amazon Services.

    Almost like a ComCast or Verizon Services commercial.

    If it were a new web based application it might be worth looking at. Instead, it is just another function of Amazon.
    infoaaa6
  • How to really make money with Web 2.0 - and how to write about it

    The writer needs to briefly explain some or all of these acronyms. Don't expect that most readers who are interested in the title of your article and included in the 23 Jan 08 ZDNet newsletter will also be familiar with VC, DevPay, and AWS.
    moorem1
    • defined

      VC = Venture Capitalist
      DevPay = Amazon DevPay
      AWS = Amazon Web Services
      rlescaille
  • Not as simple as all that

    Amazon Web Services (AWS) and DevPay *might* help you to make money off of your Web 2.0 application but it's not exactly your ticket to easy money. You still have to build the application, test it and then attract users who are willing to pay money. All of that costs either in terms of your uncompensated time for development or actual outlay for the AWS services that you employ. Granted, these will be smaller (potentially) than renting space on conventional hosting services. Advertising to attract those customers will be the biggest nut but the aforementioned, Google AdSense could help mitigate the cost of this.

    There is also a pretty steep learning curve (for many of us anyhow) in adopting the AWS model. The "Elastic Compute Cloud" (EC2) allows you to created virtual machines called AMI's (Amazon Machine Images) that you essentially build off-line and upload to EC2. This requires enough knowledge to build a stable Linux (or other) server with all of the components it'll require for your app and then turn it into an AMI with a command line tool. You'll also need to have enough bandwidth to upload the AMI to EC2.

    Among the other components that Amazon offers are flexible storage (S3) and a curious kind of schema-less structured query system called SimpleDB. I understand that the latter is not under the DevPay umbrella but it probably will be soon. Oh, and all of these components are still in Beta.

    It seems to me that once you are up and running, the AWS components could offer the stability and scalability that we hope for as our user base begins to grow beyond our wildest imaginings. I shrink from trying to imagine the nightmare if it could not.

    Mark
    markaaa4
  • RE: How to really make money with Web 2.0

    Isn't Web 2.0 (whatever the hell it really means) dead yet?
    motorhead1979
  • RE: How to really make money with Web 2.0

    Web 3.0 coming soon.. The convergence of the telephone, TV and internet into one device. The company that leads the way is the company that allows your everyday web 2.0 profile to become intergrated with all of your devices that are controlled by you URL ( profile) Thats the mission of Trigeia.com which just launched jan 10th 2008.
    twin3
  • RE: How to really make money with Web 2.0

    Nice..
    thanks<br/>
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