Every now and then I get a little worried.
As a web developer who generates the bulk of their income via advertising, I get nervous a lot. Ad blockers and intrusive flashing ads and audio ads and banner blindness and low CTRs and low CPMs and a looming Bubble 2.0... it's enough to sit back and wonder if things are going to collapse on us some day. It's not easy for an independent publisher or a small team of developers to spend a lot of time with inventory or customer relations or anything like that... for the time being, advertising supports a number of great websites that might not be around without it.
But sometimes I do wonder what would happen if Google dies tomorrow and the online advertising market dries up suddenly. It's good, really; it gets you to start thinking outside of the box. The same type of thinking led me to move from relying fully on third party network advertisers for Good-Tutorials to rolling my own solution of featured tutorials to help stabilize my income (and also to replace intrusive ads like popups with a type of advertising the user actually would really like to see).
Lately I've been looking around the web and trying to see what's new and what's working for people. Subscriptions seem to be making a splash in a big way.
37signals seemed to pave the way for the majority of these services; they really pushed the free limited account and paid-for account with more features. After their huge successes with Basecamp, Backpack, Campfire and now Highrise, others have taken their pricing idea and have run with it.
I think some of the most cutting-edge design and development being done online today are within this area. They push hard to get you to quickly sign up and get down to using the product in hopes that they'll be able to hook you into going the paid subscription route. I've run into more and more services that make previous tasks so much simpler for me that it makes sense to pay the extra money to get a more polished solution rather than go through the pain of doing it myself. That is pure Entrepreneurship 101.
Lighthouse was one of the first ones that really stuck out for me a few months back. Stunning design, very well thought-out UI, and Rails to boot. Lighthouse handles the bug tracking role, similar to Trac or Bugzilla. Again, I could go in and install some bug tracker on a server somewhere (or even locally), but Lighthouse does it smoother, prettier, and better than I could do it. (You can likely expect a public Good-Tutorials Lighthouse in the future for bug reports, feature requests and so on when the next version launches.)
The same guys (ActiveReload, who also have a cool blog) created Warehouse a little bit ago, which lets you browse your Subversion repository more easily. Cool, but it's not a hosted solution (which brings with it separate advantages and disadvantages). I've been getting into Beanstalk for that purpose- another gorgeous app that does what it does simply and really well. Again, something that I could do myself, but it would take me more time to do, would be more of a frustration, and in many ways just wouldn't measure up to what Beanstalk provides.
Along those same server administration lines, more developers are outsourcing email due to spam issues, configuration headaches, and so on. I also fall into that category. I host with Webmail.us, which offers a no-hassle setup for IMAP, POP, spam coverage, and tons of other little features that you'll probably never need.
In fact, if you really want to look at the whole idea of outsourcing technical parts of your operation, just look at the big daddy itself: Amazon. S3, EC2, FPS, and now SimpleDB are all clear attacks on the traditional notion of scaling being a pain to deal with. People will pay money to other people if they can solve their problems easier and quicker than they can do themselves. 37signals, for one, uses S3 for some of portion of their applications. I'm sure they have the technical prowess to set up a separate cluster of servers to handle caching and static file serving, but here they are going with Amazon regardless. People will pay to reduce headaches.
I, for one, am quite interested to see what is in store for us in this small slice of the internet in the upcoming year or two. With frameworks becoming more and more mature and with servers becoming cheaper and faster, these types of services become easier to develop and market towards an audience with a perpetually diminishing amount of free time available.
Gaurav Oberoi from BillMonk recently pointed me towards a video of him and his partner Chuck Groom giving a talk at Google about the creation of BillMonk. This actually ties together a few of my last blog posts- it gives a great background about design decisions involved in BillMonk, shows a pretty solid PowerPoint, and exemplifies the user-centric mentality I've noted previously.
If you're interested in design, entrepreneurship, or just curious in learning about how a new web app is made, I really do suggest checking out the video. Personally I dig all three aspects. It's also really interesting and relevant to me because it's a couple young guys just getting together to create a great product and to start up a new company between the two. Some interesting aspects that I made note of during the presentation:
They're aiming at bootstrapping BillMonk. I wish they'd go further into how they're staying afloat right now; they don't have any ads on the site and I'm sure they're reaching some real costs now. They had a couple thousand users back in June- given some of the growth numbers they've mentioned they're probably needing some decent investment into hardware. Additionally, they're looking to add a handful of new hires for 2007, so naturally they'll need to give out some salaries at some point. I wonder if they're getting some angel investment behind the scenes or if maybe they have some profits in the background somewhere that I haven't noticed yet.
Half of all invited users from a new bill end up joining BillMonk. In other words, if you set up a bill amongst your friends and one person isn't on BillMonk yet, there's probably a 50/50 chance they'll sign up. That's impressive. The even better part is that once you have more than a handful of friends on BillMonk you'll be more and more likely to both stay on board (since your friends are all using the service) and invite others.
The "geek to entrepreneur" section was particularly interesting. It was fun to see how two Amazon guys tried to adapt to the business world.
The hunter vs. browser metaphor in online advertising is something that I hadn't specifically heard before, but interesting nonetheless. It does make sense how they framed their argument about not putting ads on the site as it stands right now. From a business standpoint, I'm particularly interested in how they'll be monetizing the site over the next year or two, and if they'll have advertising play a role in the future. From their point of view it might make more sense to go the VC route (or expand on angel commitments) for a few years, continue ad-free to build up the service, and then eventually get acquired or make major inroads on the payment processing side of things. Again, very intriguing stuff from an entrepreneurial point of view.