O'REILLY®
`
`co11i1Wfer boola • conferen-ces • onllne fJUbJithfng
`
`Published on O'Reilly ( http://oreilly.com/)
`See this if you're hav ing trouble printing code examples
`
`What Is Web 2.0
`
`Design Patterns and Business Models for the Next Generation of
`Software
`
`by Tim O'Reilly
`09/30/2005
`
`Oct. 2009: Tim O'Reilly and -John Battelle answer the question of "What's next for
`Web 2 .0?" in Web Squared: Web 2 .0 Five Years On .
`
`The bursting of the dot-com bubble in the fall of 2001 marked a turning point for
`the web. Many people concluded that the web was overhyped, when in fact
`bubbles and consequent shakeouts appear to be a common feature of all
`technological revolutions . Shakeouts typically mark the point at which an
`ascendant technology is ready to take its place at center stage. The pretenders are
`given the bum's rush, the real success stories show their strength, and there begins
`to be an understanding of what separates one from the other.
`
`Read this article in:
`
`• Arabic
`• Chinese
`• French
`• German
`• Italian
`• Japanese
`• Korean
`• Spanish
`
`The concept of "Web 2.0" began with a conference brainstorming session between O'Reilly and MediaLive
`International. Dale Dougherty, web pioneer and O'Reilly VP, noted that far from having "crashed" , the web
`was more imp01tant than ever, with exciting new applications and sites popping up with surprising
`regularity . What's more, the companies that had survived the collapse seemed to have some things in
`common. Could it be that the dot-com collapse marked some kind of turning point for the web , such that a
`call to action such as "Web 2.0" might make sense? We agreed that it did , and so the Web 2.0 Conference
`was born.
`
`In the year and a half since , the term "Web 2 .0" has clearly taken hold , with more than 9.5 million citations
`in Google. But there's still a huge amount of disagreement about just what Web 2.0 means , with some
`people decrying it as a meaningless marketing buzzword, and others accepting it as the new conventional
`wisdom.
`
`This article is an attempt to clarify just what we mean by Web 2.0.
`
`In our initial brainstorming, we formulated our sense of Web 2.0 by example:
`
`Web 1.0
`DoubleClick
`
`Web 2.0
`--> Google AdSense
`
`EXHIBIT 2080
`Facebook, Inc. et al.
`v.
`Software Rights Archive, LLC
`CASE IPR2013-00480
`
`

`

`5/15/2014
`
`O'Reilly Network: What Is Web 2.0
`Flickr
`-->
`Ofoto
`--> BitTorrent
`Akamai
`mp3.com --> Napster
`Britannica Online
`--> Wikipedia
`personal websites
`-->
`blogging
`evite
`-->
`upcoming.org and EVDB
`domain name speculation
`-->
`search engine optimization
`page views
`-->
`cost per click
`screen scraping
`--> web services
`publishing
`-->
`participation
`content management systems
`--> wikis
`directories (taxonomy)
`-->
`tagging ("folksonomy")
`stickiness
`-->
`syndication
`The list went on and on. But what was it that made us identify one application or approach as "Web 1.0"
`and another as "Web 2.0"? (The question is particularly urgent because the Web 2.0 meme has become so
`widespread that companies are now pasting it on as a marketing buzzword, with no real understanding of
`just what it means. The question is particularly difficult because many of those buzzword-addicted startups
`are definitely not Web 2.0, while some of the applications we identified as Web 2.0, like Napster and
`BitTorrent, are not even properly web applications!) We began trying to tease out the principles that are
`demonstrated in one way or another by the success stories of web 1.0 and by the most interesting of the new
`applications.
`1. The Web As Platform
`Like many important concepts, Web 2.0 doesn't have a hard boundary, but rather, a gravitational core. You
`can visualize Web 2.0 as a set of principles and practices that tie together a veritable solar system of sites
`that demonstrate some or all of those principles, at a varying distance from that core.
`
`http://oreilly.com/lpt/a/6228
`
`2/17
`
`

`

`5/15/2014
`
`O'Reilly Network: What Is Web 2.0
`
`Figure 1 shows a "meme map" of Web 2.0 that was developed at a brainstorming session during FOO
`Camp, a conference at O'Reilly Media. It's very much a work in progress, but shows the many ideas that
`radiate out from the Web 2.0 core.
`For example, at the first Web 2.0 conference, in October 2004, John Battelle and I listed a preliminary set of
`principles in our opening talk. The first of those principles was "The web as platform." Yet that was also a
`rallying cry of Web 1.0 darling Netscape, which went down in flames after a heated battle with Microsoft.
`What's more, two of our initial Web 1.0 exemplars, DoubleClick and Akamai, were both pioneers in
`treating the web as a platform. People don't often think of it as "web services", but in fact, ad serving was
`the first widely deployed web service, and the first widely deployed "mashup" (to use another term that has
`gained currency of late). Every banner ad is served as a seamless cooperation between two websites,
`delivering an integrated page to a reader on yet another computer. Akamai also treats the network as the
`platform, and at a deeper level of the stack, building a transparent caching and content delivery network that
`eases bandwidth congestion.
`Nonetheless, these pioneers provided useful contrasts because later entrants have taken their solution to the
`same problem even further, understanding something deeper about the nature of the new platform. Both
`DoubleClick and Akamai were Web 2.0 pioneers, yet we can also see how it's possible to realize more of
`the possibilities by embracing additional Web 2.0 design patterns.
`Let's drill down for a moment into each of these three cases, teasing out some of the essential elements of
`difference.
`Netscape vs. Google
`If Netscape was the standard bearer for Web 1.0, Google is most certainly the standard bearer for Web 2.0,
`if only because their respective IPOs were defining events for each era. So let's start with a comparison of
`
`http://oreilly.com/lpt/a/6228
`
`3/17
`
`

`

`O'Reilly Network: What Is Web 2.0
`
`5/15/2014
`these two companies and their positioning.
`Netscape framed "the web as platform" in terms of the old software paradigm: their flagship product was
`the web browser, a desktop application, and their strategy was to use their dominance in the browser market
`to establish a market for high-priced server products. Control over standards for displaying content and
`applications in the browser would, in theory, give Netscape the kind of market power enjoyed by Microsoft
`in the PC market. Much like the "horseless carriage" framed the automobile as an extension of the familiar,
`Netscape promoted a "webtop" to replace the desktop, and planned to populate that webtop with
`information updates and applets pushed to the webtop by information providers who would purchase
`Netscape servers.
`In the end, both web browsers and web servers turned out to be commodities, and value moved "up the
`stack" to services delivered over the web platform.
`Google, by contrast, began its life as a native web application, never sold or packaged, but delivered as a
`service, with customers paying, directly or indirectly, for the use of that service. None of the trappings of the
`old software industry are present. No scheduled software releases, just continuous improvement. No
`licensing or sale, just usage. No porting to different platforms so that customers can run the software on their
`own equipment, just a massively scalable collection of commodity PCs running open source operating
`systems plus homegrown applications and utilities that no one outside the company ever gets to see.
`At bottom, Google requires a competency that Netscape never needed: database management. Google isn't
`just a collection of software tools, it's a specialized database. Without the data, the tools are useless; without
`the software, the data is unmanageable. Software licensing and control over APIs--the lever of power in the
`previous era--is irrelevant because the software never need be distributed but only performed, and also
`because without the ability to collect and manage the data, the software is of little use. In fact, the value of
`the software is proportional to the scale and dynamism of the data it helps to manage.
`Google's service is not a server--though it is delivered by a massive collection of internet servers--nor a
`browser--though it is experienced by the user within the browser. Nor does its flagship search service even
`host the content that it enables users to find. Much like a phone call, which happens not just on the phones
`at either end of the call, but on the network in between, Google happens in the space between browser and
`search engine and destination content server, as an enabler or middleman between the user and his or her
`online experience.
`While both Netscape and Google could be described as software companies, it's clear that Netscape
`belonged to the same software world as Lotus, Microsoft, Oracle, SAP, and other companies that got their
`start in the 1980's software revolution, while Google's fellows are other internet applications like eBay,
`Amazon, Napster, and yes, DoubleClick and Akamai.
`
`DoubleClick vs. Overture and AdSense
`Like Google, DoubleClick is a true child of the internet era. It harnesses software as a service, has a core
`competency in data management, and, as noted above, was a pioneer in web services long before web
`services even had a name. However, DoubleClick was ultimately limited by its business model. It bought
`into the '90s notion that the web was about publishing, not participation; that advertisers, not consumers,
`ought to call the shots; that size mattered, and that the internet was increasingly being dominated by the top
`
`http://oreilly.com/lpt/a/6228
`
`4/17
`
`

`

`5/15/2014
`O'Reilly Network: What Is Web 2.0
`websites as measured by MediaMetrix and other web ad scoring companies.
`As a result, DoubleClick proudly cites on its website "over 2000 successful implementations" of its
`software. Yahoo! Search Marketing (formerly Overture) and Google AdSense, by contrast, already serve
`hundreds of thousands of advertisers apiece.
`Overture and Google's success came from an understanding of what Chris Anderson refers to as "the long
`tail," the collective power of the small sites that make up the bulk of the web's content. DoubleClick's
`offerings require a formal sales contract, limiting their market to the few thousand largest websites. Overture
`and Google figured out how to enable ad placement on virtually any web page. What's more, they
`eschewed publisher/ad-agency friendly advertising formats such as banner ads and popups in favor of
`minimally intrusive, context-sensitive, consumer-friendly text advertising.
`The Web 2.0 lesson: leverage customer-self service and algorithmic data management to reach out to the
`entire web, to the edges and not just the center, to the long tail and not just the head.
`Not surprisingly, other web 2.0 success stories demonstrate this
`same behavior. eBay enables occasional transactions of only a few
`dollars between single individuals, acting as an automated
`intermediary. Napster (though shut down for legal reasons) built its
`network not by building a centralized song database, but by
`architecting a system in such a way that every downloader also
`became a server, and thus grew the network.
`Akamai vs. BitTorrent
`Like DoubleClick, Akamai is optimized to do business with the
`head, not the tail, with the center, not the edges. While it serves the
`benefit of the individuals at the edge of the web by smoothing their
`access to the high-demand sites at the center, it collects its revenue
`from those central sites.
`BitTorrent, like other pioneers in the P2P movement, takes a radical
`approach to internet decentralization. Every client is also a server;
`files are broken up into fragments that can be served from multiple
`locations, transparently harnessing the network of downloaders to
`provide both bandwidth and data to other users. The more popular
`the file, in fact, the faster it can be served, as there are more users
`providing bandwidth and fragments of the complete file.
`BitTorrent thus demonstrates a key Web 2.0 principle: the service
`automatically gets better the more people use it. While Akamai
`must add servers to improve service, every BitTorrent consumer
`brings his own resources to the party. There's an implicit
`"architecture of participation", a built-in ethic of cooperation, in
`which the service acts primarily as an intelligent broker, connecting
`the edges to each other and harnessing the power of the users
`themselves.
`
`A Platform Beats an Application
`Every Time
`In each of its past confrontations
`with rivals, Microsoft has
`successfully played the platform
`card, trumping even the most
`dominant applications. Windows
`allowed Microsoft to displace Lotus
`1-2-3 with Excel, WordPerfect with
`Word, and Netscape Navigator
`with Internet Explorer.
`This time, though, the clash isn't
`between a platform and an
`application, but between two
`platforms, each with a radically
`different business model: On the
`one side, a single software
`provider, whose massive installed
`base and tightly integrated
`operating system and APIs give
`control over the programming
`paradigm; on the other, a system
`without an owner, tied together by
`a set of protocols, open standards
`and agreements for cooperation.
`Windows represents the pinnacle of
`proprietary control via software
`APIs. Netscape tried to wrest
`control from Microsoft using the
`same techniques that Microsoft
`
`http://oreilly.com/lpt/a/6228
`
`5/17
`
`

`

`5/15/2014
`O'Reilly Network: What Is Web 2.0
`2. Harnessing Collective Intelligence
`The central principle behind the success of the giants born in the
`Web 1.0 era who have survived to lead the Web 2.0 era appears to
`be this, that they have embraced the power of the web to harness
`collective intelligence:
`Hyperlinking is the foundation of the web. As users add new
`content, and new sites, it is bound in to the structure of the
`web by other users discovering the content and linking to it.
`Much as synapses form in the brain, with associations
`becoming stronger through repetition or intensity, the web of
`connections grows organically as an output of the collective
`activity of all web users.
`Yahoo!, the first great internet success story, was born as a
`catalog, or directory of links, an aggregation of the best work
`of thousands, then millions of web users. While Yahoo! has
`since moved into the business of creating many types of
`content, its role as a portal to the collective work of the net's
`users remains the core of its value.
`Google's breakthrough in search, which quickly made it the
`undisputed search market leader, was PageRank, a method of
`using the link structure of the web rather than just the
`characteristics of documents to provide better search results.
`eBay's product is the collective activity of all its users; like the
`web itself, eBay grows organically in response to user
`activity, and the company's role is as an enabler of a context
`in which that user activity can happen. What's more, eBay's
`competitive advantage comes almost entirely from the critical
`mass of buyers and sellers, which makes any new entrant
`offering similar services significantly less attractive.
`Amazon sells the same products as competitors such as
`Barnesandnoble.com, and they receive the same product
`descriptions, cover images, and editorial content from their
`vendors. But Amazon has made a science of user
`engagement. They have an order of magnitude more user
`reviews, invitations to participate in varied ways on virtually
`every page--and even more importantly, they use user activity
`to produce better search results. While a Barnesandnoble.com
`search is likely to lead with the company's own products, or
`sponsored results, Amazon always leads with "most popular",
`a real-time computation based not only on sales but other
`factors that Amazon insiders call the "flow" around products.
`With an order of magnitude more user participation, it's no
`surprise that Amazon's sales also outpace competitors.
`Now, innovative companies that pick up on this insight and perhaps
`extend it even further, are making their mark on the web:
`
`itself had used against other rivals,
`and failed. But Apache, which held
`to the open standards of the web,
`has prospered. The battle is no
`longer unequal, a platform versus a
`single application, but platform
`versus platform, with the question
`being which platform, and more
`profoundly, which architecture, and
`which business model, is better
`suited to the opportunity ahead.
`Windows was a brilliant solution to
`the problems of the early PC era. It
`leveled the playing field for
`application developers, solving a
`host of problems that had
`previously bedeviled the industry.
`But a single monolithic approach,
`controlled by a single vendor, is no
`longer a solution, it's a problem.
`Communications-oriented systems,
`as the internet-as-platform most
`certainly is, require interoperability.
`Unless a vendor can control both
`ends of every interaction, the
`possibilities of user lock-in via
`software APIs are limited.
`Any Web 2.0 vendor that seeks to
`lock in its application gains by
`controlling the platform will, by
`definition, no longer be playing to
`the strengths of the platform.
`This is not to say that there are not
`opportunities for lock-in and
`competitive advantage, but we
`believe they are not to be found via
`control over software APIs and
`protocols. There is a new game
`afoot. The companies that succeed
`in the Web 2.0 era will be those
`that understand the rules of that
`game, rather than trying to go back
`to the rules of the PC software era.
`
`http://oreilly.com/lpt/a/6228
`
`6/17
`
`

`

`5/15/2014
`
`O'Reilly Network: What Is Web 2.0
`Wikipedia, an online encyclopedia based on the unlikely notion that an entry can be added by any
`web user, and edited by any other, is a radical experiment in trust, applying Eric Raymond's dictum
`(originally coined in the context of open source software) that "with enough eyeballs, all bugs are
`shallow," to content creation. Wikipedia is already in the top 100 websites, and many think it will be
`in the top ten before long. This is a profound change in the dynamics of content creation!
`Sites like del.icio.us and Flickr, two companies that have received a great deal of attention of late,
`have pioneered a concept that some people call "folksonomy" (in contrast to taxonomy), a style of
`collaborative categorization of sites using freely chosen keywords, often referred to as tags. Tagging
`allows for the kind of multiple, overlapping associations that the brain itself uses, rather than rigid
`categories. In the canonical example, a Flickr photo of a puppy might be tagged both "puppy" and
`"cute"--allowing for retrieval along natural axes generated user activity.
`Collaborative spam filtering products like Cloudmark aggregate the individual decisions of email
`users about what is and is not spam, outperforming systems that rely on analysis of the messages
`themselves.
`It is a truism that the greatest internet success stories don't advertise their products. Their adoption is
`driven by "viral marketing"--that is, recommendations propagating directly from one user to another.
`You can almost make the case that if a site or product relies on advertising to get the word out, it isn't
`Web 2.0.
`Even much of the infrastructure of the web--including the Linux, Apache, MySQL, and Perl, PHP,
`or Python code involved in most web servers--relies on the peer-production methods of open source,
`in themselves an instance of collective, net-enabled intelligence. There are more than 100,000 open
`source software projects listed on SourceForge.net. Anyone can add a project, anyone can download
`and use the code, and new projects migrate from the edges to the center as a result of users putting
`them to work, an organic software adoption process relying almost entirely on viral marketing.
`The lesson: Network effects from user contributions are the key to market dominance in the Web 2.0 era.
`
`Blogging and the Wisdom of Crowds
`One of the most highly touted features of the Web 2.0 era is the rise of blogging. Personal home pages have
`been around since the early days of the web, and the personal diary and daily opinion column around much
`longer than that, so just what is the fuss all about?
`At its most basic, a blog is just a personal home page in diary format. But as Rich Skrenta notes, the
`chronological organization of a blog "seems like a trivial difference, but it drives an entirely different
`delivery, advertising and value chain."
`One of the things that has made a difference is a technology called RSS. RSS is the most significant
`advance in the fundamental architecture of the web since early hackers realized that CGI could be used to
`create database-backed websites. RSS allows someone to link not just to a page, but to subscribe to it, with
`notification every time that page changes. Skrenta calls this "the incremental web." Others call it the "live
`web".
`Now, of course, "dynamic websites" (i.e., database-backed sites with dynamically generated content)
`replaced static web pages well over ten years ago. What's dynamic about the live web are not just the pages,
`but the links. A link to a weblog is expected to point to a perennially changing page, with "permalinks" for
`any individual entry, and notification for each change. An RSS feed is thus a much stronger link than, say a
`
`http://oreilly.com/lpt/a/6228
`
`7/17
`
`

`

`O'Reilly Network: What Is Web 2.0
`
`5/15/2014
`bookmark or a link to a single page.
`RSS also means that the web browser is not the only means of
`viewing a web page. While some RSS aggregators, such as
`Bloglines, are web-based, others are desktop clients, and still others
`allow users of portable devices to subscribe to constantly updated
`content.
`RSS is now being used to push not just notices of new blog entries,
`but also all kinds of data updates, including stock quotes, weather
`data, and photo availability. This use is actually a return to one of its
`roots: RSS was born in 1997 out of the confluence of Dave Winer's
`"Really Simple Syndication" technology, used to push out blog
`updates, and Netscape's "Rich Site Summary", which allowed users
`to create custom Netscape home pages with regularly updated data
`flows. Netscape lost interest, and the technology was carried
`forward by blogging pioneer Userland, Winer's company. In the
`current crop of applications, we see, though, the heritage of both
`parents.
`But RSS is only part of what makes a weblog different from an
`ordinary web page. Tom Coates remarks on the significance of the
`permalink:
`It may seem like a trivial piece of functionality now, but it
`was effectively the device that turned weblogs from an ease-
`of-publishing phenomenon into a conversational mess of
`overlapping communities. For the first time it became
`relatively easy to gesture directly at a highly specific post on
`someone else's site and talk about it. Discussion emerged.
`Chat emerged. And - as a result - friendships emerged or
`became more entrenched. The permalink was the first - and
`most successful - attempt to build bridges between weblogs.
`In many ways, the combination of RSS and permalinks adds many
`of the features of NNTP, the Network News Protocol of the Usenet,
`onto HTTP, the web protocol. The "blogosphere" can be thought of
`as a new, peer-to-peer equivalent to Usenet and bulletin-boards, the
`conversational watering holes of the early internet. Not only can
`people subscribe to each others' sites, and easily link to individual
`comments on a page, but also, via a mechanism known as
`trackbacks, they can see when anyone else links to their pages, and
`can respond, either with reciprocal links, or by adding comments.
`Interestingly, two-way links were the goal of early hypertext
`systems like Xanadu. Hypertext purists have celebrated trackbacks
`as a step towards two way links. But note that trackbacks are not
`properly two-way--rather, they are really (potentially) symmetrical
`one-way links that create the effect of two way links. The difference
`may seem subtle, but in practice it is enormous. Social networking
`
`The Architecture of Participation
`Some systems are designed to
`encourage participation. In his
`paper, The Cornucopia of the
`Commons, Dan Bricklin noted that
`there are three ways to build a large
`database. The first, demonstrated
`by Yahoo!, is to pay people to do
`it. The second, inspired by lessons
`from the open source community, is
`to get volunteers to perform the
`same task. The Open Directory
`Project, an open source Yahoo
`competitor, is the result. But
`Napster demonstrated a third way.
`Because Napster set its defaults to
`automatically serve any music that
`was downloaded, every user
`automatically helped to build the
`value of the shared database. This
`same approach has been followed
`by all other P2P file sharing
`services.
`One of the key lessons of the Web
`2.0 era is this: Users add value. But
`only a small percentage of users
`will go to the trouble of adding
`value to your application via
`explicit means. Therefore, Web 2.0
`companies set inclusive defaults for
`aggregating user data and building
`value as a side-effect of ordinary
`use of the application. As noted
`above, they build systems that get
`better the more people use them.
`Mitch Kapor once noted that
`"architecture is politics."
`Participation is intrinsic to Napster,
`part of its fundamental architecture.
`This architectural insight may also
`be more central to the success of
`open source software than the more
`frequently cited appeal to
`
`http://oreilly.com/lpt/a/6228
`
`8/17
`
`

`

`volunteerism. The architecture of
`the internet, and the World Wide
`Web, as well as of open source
`software projects like Linux,
`Apache, and Perl, is such that users
`pursuing their own "selfish"
`interests build collective value as an
`automatic byproduct. Each of these
`projects has a small core, well-
`defined extension mechanisms, and
`an approach that lets any well-
`behaved component be added by
`anyone, growing the outer layers of
`what Larry Wall, the creator of
`Perl, refers to as "the onion." In
`other words, these technologies
`demonstrate network effects,
`simply through the way that they
`have been designed.
`These projects can be seen to have
`a natural architecture of
`participation. But as Amazon
`demonstrates, by consistent effort
`(as well as economic incentives
`such as the Associates program), it
`is possible to overlay such an
`architecture on a system that would
`not normally seem to possess it.
`
`5/15/2014
`O'Reilly Network: What Is Web 2.0
`systems like Friendster, Orkut, and LinkedIn, which require
`acknowledgment by the recipient in order to establish a connection,
`lack the same scalability as the web. As noted by Caterina Fake, co-
`founder of the Flickr photo sharing service, attention is only
`coincidentally reciprocal. (Flickr thus allows users to set watch lists-
`-any user can subscribe to any other user's photostream via RSS.
`The object of attention is notified, but does not have to approve the
`connection.)
`If an essential part of Web 2.0 is harnessing collective intelligence,
`turning the web into a kind of global brain, the blogosphere is the
`equivalent of constant mental chatter in the forebrain, the voice we
`hear in all of our heads. It may not reflect the deep structure of the
`brain, which is often unconscious, but is instead the equivalent of
`conscious thought. And as a reflection of conscious thought and
`attention, the blogosphere has begun to have a powerful effect.
`First, because search engines use link structure to help predict useful
`pages, bloggers, as the most prolific and timely linkers, have a
`disproportionate role in shaping search engine results. Second,
`because the blogging community is so highly self-referential,
`bloggers paying attention to other bloggers magnifies their visibility
`and power. The "echo chamber" that critics decry is also an
`amplifier.
`If it were merely an amplifier, blogging would be uninteresting. But
`like Wikipedia, blogging harnesses collective intelligence as a kind
`of filter. What James Suriowecki calls "the wisdom of crowds"
`comes into play, and much as PageRank produces better results than
`analysis of any individual document, the collective attention of the
`blogosphere selects for value.
`While mainstream media may see individual blogs as competitors, what is really unnerving is that the
`competition is with the blogosphere as a whole. This is not just a competition between sites, but a
`competition between business models. The world of Web 2.0 is also the world of what Dan Gillmor calls
`"we, the media," a world in which "the former audience", not a few people in a back room, decides what's
`important.
`3. Data is the Next Intel Inside
`Every significant internet application to date has been backed by a specialized database: Google's web
`crawl, Yahoo!'s directory (and web crawl), Amazon's database of products, eBay's database of products
`and sellers, MapQuest's map databases, Napster's distributed song database. As Hal Varian remarked in a
`personal conversation last year, "SQL is the new HTML." Database management is a core competency of
`Web 2.0 companies, so much so that we have sometimes referred to these applications as "infoware" rather
`than merely software.
`This fact leads to a key question: Who owns the data?
`In the internet era, one can already see a number of cases where control over the database has led to market
`
`http://oreilly.com/lpt/a/6228
`
`9/17
`
`

`

`5/15/2014
`O'Reilly Network: What Is Web 2.0
`control and outsized financial returns. The monopoly on domain name registry initially granted by
`government fiat to Network Solutions (later purchased by Verisign) was one of the first great moneymakers
`of the internet. While we've argued that business advantage via controlling software APIs is much more
`difficult in the age of the internet, control of key data sources is not, especially if those data sources are
`expensive to create or amenable to increasing returns via network effects.
`Look at the copyright notices at the base of every map served by MapQuest, maps.yahoo.com,
`maps.msn.com, or maps.google.com, and you'll see the line "Maps copyright NavTeq, TeleAtlas," or with
`the new satellite imagery services, "Images copyright Digital Globe." These companies made substantial
`investments in their databases (NavTeq alone reportedly invested $750 million to build their database of
`street addresses and directions. Digital Globe spent $500 million to launch their own satellite to improve on
`government-supplied imagery.) NavTeq has gone so far as to imitate Intel's familiar Intel Inside logo: Cars
`with navigation systems bear the imprint, "NavTeq Onboard." Data is indeed the Intel Inside of these
`applications, a sole source component in systems whose software infrastructure is largely open source or
`otherwise commodified.
`The now hotly contested web mapping arena demonstrates how a failure to understand the importance of
`owning an application's core data will eventually undercut its competitive position. MapQuest pioneered the
`web mapping category in 1995, yet when Yahoo!, and then Microsoft, and most recently Google, decided
`to enter the market, they were easily able to offer a competing application simply by licensing the same data.
`Contrast, however, the position of Amazon.com. Like competitors such as Barnesandnoble.com, its original
`database came from ISBN registry provider R.R. Bowker. But unlike MapQuest, Amazon relentlessly
`enhanced the data, adding publisher-supplied data such as cover images, table of contents, index, and
`sample material. Even more importantly, they harnessed their users to annotate the data, such that after ten
`years, Amazon, not Bowker, is the primary source for bibliographic data on books, a reference source for
`scholars and librarians as well as consumers. Amazon also introduced their own proprietary identifier, the
`ASIN, which corresponds to the ISBN where one is present, and creates an equivalent namespace for
`products without one. Effectively, Amazon "embraced and extended" their data suppliers.
`Imagine if MapQuest had done the same thing, harnessing their users to annotate maps and directions,
`adding layers of value. It would have been much more difficult for competitors to enter the market just by
`licensing the base data.
`The recent introduction of Google Maps provides a living laboratory for the competition between
`application vendors and their data suppliers. Google's lightweight programming model has led to the
`creation of numerous value-added services in the form of mashups that link Google Maps with other
`internet-accessible data sources. Paul Rademacher's housingmaps.com, which combines Google Maps with
`Craigslist apartment rental and home purchase data to create an interactive housing sear