Web 2.0 is Color to Television (and Web 3.0 is Cable to Television)
We all know about the hype around Web 2.0 like it's the biggest invention ever happen in years of information technology timeline. But is it really big and marked the end of desktop era? Let's take a look at these analogies.
Assume we're in 80's and color TV is just appearing in sight. The old, black and white TV is just so boring that people bought a lot of new TVs for just one feature, color. Content providers, in this case TV channels, also moved on to colorful broadcasts.
Web 2.0 is also like this transition from B/W TV to color TV. It utilizes many new technologies (like easier server side programming), bigger bandwiths (more content and types can be delivered), and more Internet-enabled mass (more market to prey on). In technology terms, Web 2.0 is a great leap forward.
But apparently, the business model is just about the same. Take a look at Google, a company said to energizes the web towards v2.0 with it's free services. Google amasses page views, and monetize them using advertisements. It's just that. Google fanatics may say, "Google also delivers context-sensitive-targeted advertisement!" Okay, but it is still an advertising game.
Now take a look at what happens in the tellie business. Publicly broadcasted, ad-funded channels are disappearing. Some of the best channels like HBO, Cinemax, Discovery Channel, or even Cartoon Network is based on paid subscription without ad. These "premium" content are then preferred over free channels, because the subscription is so cheap that really justifies ad-free contents.
Will Web 2.0 use this model? I think not. With Google as the de-facto leader of it, it's really hard to do that. Google itself is an advertising company, thus without ad, it is nothing.
Here comes Microsoft. It's big, it's slow (well, compared to Google), but it's definitely works for everyone. Don't believe it? Go tell your ma and pa to use that penguin-powered OS. They'll switch back to old-four-colored-flags-powered OS (i.e. Windows XP) in no time. Or try let them use Google Spreadsheet, compare it with Excel. The thing is, Windows (and Office) is so easy to use (for an average Joe) that he prefers it to the cheaper (or even free!) one. There's a joke: one of the Linux distro has to be tagged "Linux for Human", to indicate it's the most human-friendly fork. Other distros are definitely not suitable for human - unless you're not a human, you shouldn't even read this article since this post assumes human access to Internet.
Microsoft also has Internet services, like Live Search, Live Mail, Spaces, etc. They have those since the beginning of Internet boom. Kindly remember the battle between Yahoo! Mail and HotMail for users using e-mail storage space. 5Mb difference at that day was a real killer for users. Microsoft've been around for years, but they have not leveraged the advertising industry. Not because they don't understand advertising industry, but because they don't need it. Sales of Windows and Office alone can support a company as big as Google giving free services without the ad.
Microsoft's move to go buy aQuantive (an online advertising company) after Google's buy of DoubleClick is just another way of killing advertisement. aQuantive is bigger than DoubleClick (approx. three-plus times bigger), and Microsoft bought that. Microsoft would kill the whole online advertising industry, just because they don't need it. "You buy Windows and Office, we'll give you free Internet services, without the ads." That would be a big punchline for their next Windows project (Vienna, slated for release in 2009, is said to bring the Web closer to the desktop).
They've started testing the water with Office Live, which is a program where you pay subscription for an Internet service like web hosting, e-mail, etc. Windows Home Server will also play a major part in this, since you'll be able to connect to your Windows Home Server (plus all the files in it) from anywhere using the Internet. This whole ecosystem doesn't need any advertising to run. They need you to buy the desktop app.
So, in the future, online advertising industry will be shut down. Not because there are no more advertiser, but because no one prefer it to the paid contents. You might not need credit card or monthly subscription, because Microsoft will give that for you for free (provided you buy Windows and Office). Content providers also will be centralized into big companies, because smaller, advertising based won't make enough to be sustainable. Big content providers have the advantage of economy of scale, so they can deliver more for less.
Amazon have started this service, they offer spaces for objects in the Internet for free (very likely advertising- or venture-backed). But it's not any time longer that you will just pay monthly $10 for unlimited storage service. Even better, maybe buy Amazon desktop application to access your information on the web for $100 and get free unlimited online storage service forever.
So, free service is nice, it's even the dream of anyone. Advertisement funded service is also nice, but it's a tradeoff with annoyance/pleasure of user. A bundled service is the jack of all trade; buy the desktop software, get the free service for life. It's like: buy a television, watch anything ad-free. It's harder to do in television business, since you got so many television manufacturer (hardware/software) and television channels (content provider), but in IT, you basically got only two platform (Microsoft and non-Microsoft) and will-be very little content providers (only big companies big enough to get a big economy of scale benefit).
BTW, content does not even need to come from content providers. User generated content is a very viable way of generating content (for free). User creates content, put it at their own space, others can benefit from that. Content providers will only provide content spaces, rather than the content itself.
This will be what I call Web 3.0. Web 3.0 is like Cable to Television, where you will pay some amount for unlimited ad-free service. Desktop is the main application users will use (instead of web browsers), and money for the content providers will primarily generated by the sales of this desktop apps, rather than advertisement (or even subscription).
Of course, like today's tellie, Web 1.0, 2.0, and 3.0 can coexist like B/W, Color, and Cable TV. But the market share will always gravitate towards the newer, better version. Are you ready for Web 3.0?