Changes, challenges and opportunities in the era of the information revolution Over the last two decades social communication has changed, with broadband Internet and new technical devices bringing more collaboration, social interaction, personalization and active participation. Along with their associated technological advances, including content-generation, rich Internet and enterprise applications, e-mail, messaging and mash-ups, these devices and applications are all part of the Internet evolution, Web 2.0. Already affecting societies, communities, businesses, established business models, users and consumer behavior, Web 2.0 tools, such as collaboration-productivity tools, unified communications, virtual worlds and Web services, will be increasingly leveraged by enterprises. These tools will drive the growth of a social-networking enterprise software industry and double the online advertising market by 2012, creating opportunities for monetizing Web 2.0.

 

Social communication has changed. In the past two decades, technical devices have brought more collaboration, social interaction, personalization, active participation and communication itself than ever before. One of the main reasons for this has been the emergence and spread of broadband Internet. However, associated technological advances, such as e-mail, messaging, rich Internet applications, content-generation applications, mash-ups and enterprise applications, have also played a major role.

 

This stage of Internet evolution is known as Web 2.0. It is already having an effect, not only on societies and communities, but also on businesses and established business models.

 

But most of all, perhaps, it is having an effect on users: on how they react to the promise of an evolved Internet, on what they do with it, even on exactly who those users are. Together, these factors are creating a new type of user known as User 2.0.

 

In this paper we look at the effects of Web 2.0 on the behaviors of online users. These effects include:

 

·         Shift of attitudes of Internet users

·         Growth in broadband connection

·         Content being delivered free of charge

·         Online social networking as a new communications domain

·         Fragmentation of consumer markets

·         The Internet as the main source and transmitter of knowledge

·         Internet privacy, online security and data ownership Web 2.0 is affecting corporations too. For these businesses, the spread of broadband and online services brings new revenue opportunities. However, it also threatens current business models.

 

Internally, enterprises globally will increasingly make Web 2.0 tools part of their routine. Collaboration productivity tools, unified communications, virtual worlds and Web services are among the tools likely to be adopted. Their adoption will, in turn, drive the growth of a social-networking enterprise software industry.

 

As new Internet Web 2.0 services emerge, online advertising will grow in importance. There are a number of reasons for this. First, an increasing number of users are spending an increasing amount of time on the Internet. As new companies appear offering tools that make Web 2.0 even more attractive, this trend will accelerate. Advertisers will obviously want to reach this vast audience. And this change will not just involve private individuals: as corporate use of the Internet increases, not only will advertising offer a way to reach such businesses, but it will also offer the corporations themselves a way to reach potential customers, both high-level clients and ordinary consumers.

 

Traditional advertising vehicles, such as magazines and television, will probably continue to attract significant advertising budgets for some time to come. However, as audiences spend less of their free time watching TV and more online, Internet advertising will grow quickly.

 

It is no surprise then, that the global online advertising market is expected to double in size from 2008 to 2012. And as it grows, the companies that helped to bring users to Web 2.0 will have a further role to play in its evolution. Providers of Web 2.0-based services will need to develop new advertising models based on users’ behaviors and willingness to buy. Already ideas such as personal cost per thousand page impressions (CPM) and pay-per-sell are attracting interest. It is by no means clear that these models will eventually be widely employed. But whatever the payment model, it will rely heavily on information about Internet users and their behaviors. This information is available already: every Internet user leaves a footprint whenever they go online. The challenge for service providers and content providers is to mine this data and make use of it, and to do so in a publicly acceptable way.

 

Technological evolution, mainly in the form of software applications and connectivity, will remain the main enabler of changes in communication behavior over the next five years. The number of global Internet users is likely to triple by 2012. The average time spent in front of the computer will grow. The amount of data transmitted will multiply; within four years it is expected to be seven times the level of today. To meet this demand, higher-capacity networks will need to be deployed.

 

Mobile Internet use will become a key driver of this trend. In fact the mobile Web is rapidly becoming the preferred method of Internet access globally. The growth of wireless broadband access (WBA) technologies, the migration of traditional telecommunications networks to Internet networks and the availability of affordable and functional Wireless Fidelity (WiFi (News - Alert)) and dual-mode WiFi-mobile phones will all boost the usage of mobile broadband Internet. However, this usage in turn will require more and better mobile devices.

 

This paper has a number of aims. It aims to explain how changes in communication and social behaviors are affecting consumer behaviors. It tries to find out what this means for the new Internet environment we call Web 2.0. And it examines ways in which the opportunities arising from Web 2.0 might be monetized.

 

But this paper also has a much more fundamental aim. It is targeted at an audience that is starting to become aware of Web 2.0 and the issues it raises; an audience that wants to learn more about the changes Web 2.0 is bringing and the impact those changes could have.

 

In the 18th century, the Industrial Revolution introduced steam power and power machinery, changing agriculture, manufacturing and transportation forever. As the Industrial Revolution took hold it started a process of wealth and population growth, increasing international trade and urbanization.

 

The Industrial Revolution affected everyone. As new machinery was introduced the need for a manual workforce declined. Many workers and farmers lost their jobs. However, there was now a need for a new breed of worker with different skills. Innovations and new ideas drove this process, a process which led to unprecedented economic growth and improved living standards, though not before it completely transformed, and even destroyed, the traditional habits and ways of life of many people.

 

Today, 250 years later, we are at the beginning of a similar revolutionary step. The rapid development of information technologies (ITs) and the global Internet are creating a new shift in society.

 

Value is more and more being driven by knowledge and access to information. This is the start of the information revolution era. Like the Industrial Revolution, the information revolution will, over time, affect everybody on the planet. It will bring new behaviors and value shifts. People’s old habits will change or disappear as they adapt to a changing world. And every change will be driven by innovations that will change the way people think and understand.

 

The first steps in this development can already be seen. The dramatic evolution of technologies and the growth of broadband Internet, along with a greater technical understanding of ordinary people, are together starting to reshape social behaviors and introduce new communication behaviors.

 

The evolution process is constant. It is driving change at an extraordinary rate and is itself driven by innovations and new ideas and their implementation into our daily lives. On the Internet, this change is called Web 2.0.

 

According to former Alcatel-Lucent (News - Alert) CEO Pat Russo, “We are not living through a technology revolution. We are living through a value revolution that is being driven by the inexorable march of innovation.”

 

Changes affecting the Internet and the telecommunications industry are the result of changed communication behaviors, going back more than two decades. The spread of broadband Internet and the development of Internet Protocol (IP) were the basis for the evolution of new software and technological devices. The result has been an evolutionary shift in the Internet.

 

People’s communication behaviors are clearly changing. But how? A number of trends or factors stand out.

 

People are starting to take a more active role in the development of information and knowledge. Traditional reference works, such as encyclopedias, are no longer seen as the only sources of reliable information. Through collaboration, or the collective development of information and knowledge, more people have more access to a greater fund of global knowledge than any formalized information source has previously been able to provide.

 

The Internet allowed people to develop and capitalize on their social circles, such as networking groups and sports clubs. It then allowed people to expand them.

 

People now want more personalized information. The changing radio industry is an example of this. In recent years there has been a growth in the number of small radio stations focusing on niche markets, such as news, jazz, sports or Latin music, all enabled by the ability to disseminate: the Internet gives worldwide access and communication to even the smallest of niches.

 

People are no longer passive receivers of information. They want to contribute and share their own perspectives.

 

Internet communications is slowly taking over from traditional phone-based voice communications and face-to-face communication. Restrictions to local or regional communities no longer apply: the Internet has enabled easy global communication.

 

These social changes are being driven by wider socio-economic changes. At one time the conduits for changing trends were the mass media, such as TV, radio and newspapers, the phone and personal social circles. The Internet has not only taken over this role but advanced the pace of change, becoming a platform for high-speed innovation across an ever greater mass of people.

 

We have established, then, that communication behaviors are changing. We have also shown that a number of new technologies are making this possible. For many people the combination of these two factors equals Web 2.0. But is it quite so simple?

 

In fact, since Tim O’Reilly first used the term Web 2.0 in 2004, there have been many attempts to define exactly what it means. The current, most comprehensive definition comes, not surprisingly, from O’Reilly himself. He says: “Web 2.0 is a set of social, economic and technology trends that collectively form the basis for the next generation of the Internet – a more mature, distinct medium characterized by user participation, openness and network effects.”

 

Based on this definition the key changes brought by Web 2.0 are:

 

·         Using the Web as an applications platform

·         Democratizing the Web

·         Employing new methods to distribute information

 

In the Web 2.0 era the power over content has been moved from the network and page administrators to the end users, hence the term read-and-write Web. The Web is no longer a passive environment; it is one in which people actively contribute.

 

As new technology comes into play, new possibilities emerge. The second-generation Internet gave the user the power to contribute content and further develop the environment in which the Internet operates. At the same time a new process began: the process of linking content together and creating a real network, rather than just isolated Web pages and services. Google (News - Alert) page rank, a breakthrough in search, is an early stage of the Web 2.0 era.

 

User involvement in content development began with users developing and sharing their own content on a given platform. They were able to use all the tools and options that the platform offered them, but not to change it. Examples of these first-generation services include sites such as blogger.com, wikipedia.org or youtube.com.

 

We are now in a second stage, where users can customize the platform, or parts of the platform, even if the core stays the same. This is done with tools such as widgets, also called gadgets, mash-ups or software plug-ins, or RSS, feeds providing constantly updated information on topics of interest to the user. With these tools, users can change the core patterns of the platform based on how they would like to see it.

 

Web 2.0 has already changed the core business of a number of corporations across various industries, bringing new revenue opportunities linked with the growth and spread of broadband and online services. And more companies from more business segments will join the broadband economy in the near future. This in turn will provide new revenue opportunities for companies providing access, applications and services.

 

As for where the monetizing opportunities will come in the next five years, the following areas are likely to dominate:

 

·         Advertising, which will become much more personal and engaging

·         Data mining, from which it will be possible to derive real-time insights into people’s behaviors and hence target services and advertisements

·         Network-capacity building

·         Enterprise 2.0 growth

·         Web 2.0 going mobile

 

In this article we will focus on exploring opportunities in advertising. Subsequent articles will focus on the other opportunities outlined in the bulleted list above.

 

New advertising platforms will be developed. They will use mobile phones, mobile messaging, mobile Internet, contextual messages on social-networking sites and personalized e-mail messages as ways of approaching customers. And they will depend more and more heavily on automated tools and databases to allow accurate targeting of those customers. The global online advertising market is expected to reach $44.6 billion during 2008 and $73 billion by 2012.

 

To date, there have been two main approaches toward online advertising. In the pay-per-click model, advertisers pay an Internet page owner only if the user clicks on their advertisement.

 

This model, popularized by Google, is used by content-targeting advertisements.

 

In the pay-per-view model, advertisers pay for every appearance of the advertisement, whether the user has decided to click on the ad or not. This mainly applies to banner advertisements on web pages. In the near future new models may evolve. Social-networking services34 in particular are likely to find innovative ways to monetize the huge user base and knowledge about user behaviors that they have managed to collect in recent years. A new type of advertising, behavioral ads, will allow reaction to consumer behaviors in almost real time and targeting to the real needs and wishes of the consumer.

 

Then there are personal CPM and pay-per-sell. Personal CPM is the value that advertisers would ascribe to someone who tells their own social circle about a product or service that would otherwise be advertised to them. The more valuable the social circle is to that particular advertiser and the greater the weight that a particular individual has within that social circle to influence behavior and consumption, the more valuable that individual’s personal CPM would be to that particular advertiser.

 

The idea behind pay-per-sell is that the advertiser pays for every purchase the customer makes and a share of the payment goes to Internet page owners where the customer has come in contact with the product. This derives from the real-world concept that to make a shopping decision customers need several experiences with a product.

 

To make such approaches effective the advertisers will need technological solutions, both software and hardware, from the telecommunications industry that are capable of storing the required data. They will also need help in understanding the customer better and new spaces in which to place advertisements, for example video messages and e-mail editors.

 

The next evolutionary step will have two main features: Semantic Web, which means that the Internet will be able to understand the meaning behind the data, and strengthening of front-end user applications, which will allow users to take complete responsibility for web platform creation in addition to content creation.

 

The objective of the so-called Semantic Web is to extract meaning from data51. It is an extension of the existing Web in which information is given well-defined meaning, enabling computers and people to collaborate together more effectively.

 

In practice this means that when you request information about, say, Michael Jordan, the Web will be able to work out whether you are searching for the former NBA star, the Senior Web Developer at Houghton Mifflin Company or any other Michael Jordan. And it will not only list web pages with information about him but will also offer a short compilation of verified data found.

 

This evolution will force changes in Internet architecture, software applications and hardware devices and, yet again, in user behaviors and attitudes. Today’s changes are already emerging in software applications, with the Resource Description Framework (RDF) and the Web Ontology Language (OWL) replacing formats such as Micro formats or XML. Hardware devices will have to cope with better Internet connectivity and higher transmission speeds. Internet architecture, meanwhile, will evolve from the current peer-to-peer networks to become more end-device centric.

 

A number of recent beta applications are believed to already be carrying some of the next-generation functionalities. Among them is Radar Networks (www.radarnetworks.com), which proposes a new network that helps you organize, share and discover information around your interests. Others are Mahalo (www.mahalo.com), described as the world’s first human-powered search engine, or Global Hosted Operating System (G.ho.st™) (http://g.ho.st/), a virtual desktop application that enables users to work with their data from every device as if they were using their own computer.

 

Which brings us to Web 3.0, or does it? Tim O’Reilly argues that the majority of services presented as “the way to 3.0” are merely further development and strengthening of the Web 2.0 platform and that we cannot expect the arrival of Web 3.0 any time soon. He suggests that Web 2.0 was built on the back of the 2001 Internet bubble crash: the strongest ideas with most potential survived and enabled the structural change of the Internet we see today. Web 3.0, he argues, will be a similar huge change. It will not just be a natural evolution from Web 2.0, as many of those currently announcing new Web 3.0 platforms think; it will change our understanding of Internet reality.

 

The widely accepted opinion about the future evolution of Web 2.0 is expressed by Business Consultant Stowe Boyd:

 

“Personally, I feel the vague lineaments of something beyond Web 2.0, and they involve some fairly radical steps” he says. “Imagine a Web without browsers. Imagine breaking away completely from the document metaphor, or a true blurring of application and information. That’s what Web 3.0 will be. But I bet we will call it something else.”