"Forrester forecasts that US businesses will spend $953 million dollars on Web analytics software in 2014, with an average compound annual growth rate of 17%," the report reads. "Growth will emerge from unexpected places as the value proposition of Web analytics technology oscillates for sophisticated analytics users and becomes more welcoming for new entrants. Ultimately, Web analytics will become part of a broader array of integrated services supporting marketers."

This assessment is undoubtedly bleak, but researchers also identified a few growth factors in the world of web analytics. First, interactive marketing budgets are growing overall. Second, online media is by far the dominant channel. And any money spent on online marketing requires that someone, somewhere be held accountable, that metrics be identified and measures, and that processes be optimized. Forrester also offers the prediction that, given the availability and affordability of web analytics data, a secondary market will spring up to offer services showing companies opportunities for using said data, thus bridging the "action chasm" between knowledge and execution.

In looking at spending, Forrester sees a move away from licensed software and toward hosted web analytics solutions. Service fees will continue to generate revenue for the industry even during turbulent economies; web traffic certainly isn't slowing down, and neither is the need for capturing accurate data about that traffic. They also see this as a vibrant market for agencies and consultancies. Also, new entrants seeking web analytics for sites with moderate traffic will account for most of the growth in this area.

Finally, because of the availability of versatile, free analytics tools, vendors in this industry are (or need to think about) shifting from "a point solution to an underlying service embedded within broader marketing applications," wrote Forrester rep Jon Symons in an email this morning.

"The transformation will only have a positive effect as customer intelligence data will be shared more widely across organizations. Significant challenges remain however, including the need for human analysis of mountains of data, the ability to develop metrics that can tie to larger business objectives, and the necessity to integrate marketing and IT organizations in order to achieve true data integration."

The executive summary is on the Forrester site, and the full report is available for purchase there.

It's a dramatic move that could pave the way for other media companies to do the same and effectively open up international markets. People complain, but do you think that viewers would pay a similar monthly fee for international access to Hulu, for example? We do.

We're still waiting for examples of US customers willing to pay for online services (the iPhone app store is a related example) but it will be interesting to see if the rest of the world is. Last.fm's announcement is an interesting response to the advertising market's belief that only eyeballs from certain countries are "worth" advertising to.

Meanwhile, the vehement insistence by users that every damn thing on the web be free works hand in hand with the rise of over-saturation in advertising. Let's see what kinds of user experience, features and services we can get by paying a little cash - shall we?

After making that post, we received a torrent of feedback, most of which was very negative. I also spoke to Netvibes CEO Freddy Mini and he shared with me some facts, figures and perspective from within the company. Based on that conversation I want to revise my statements about Netvibes and to apologize for the angry, caustic tone I took in the post.

But is Netvibes OK?

CEO Freddy Mini explained that the start page paradigm hasn't really taken off beyond the early adopter set but remains useful as a driver for sales of the company's new enterprise and "branded portal" offerings. The company also has enough users that "cost per install" of branded widgets is a meaningful source of revenue.

I expressed disappointment that the customizable start page hasn't taken the world by storm and Mini said he shared that feeling. I believe that a move away from the DIY start page and toward brand advertisers is a move away from the authenticity of Web 2.0's original vision. Even the language of "brands" is nauseating; every time an online tool succumbs to a future as a "service for brands," a kitten somewhere on earth drops dead.

Since starting to offer enterprise and branded products, though, Mini says that Netvibes increased its revenue 4X in the last 3 quarters of 2008. As a writer focused on consumer tech, that business wasn't evident to me and I didn't think much about it. The company also cut its burn rate (expenses) by 50% during the same period.

Is Netvibes pinching pennies at the expense of functionality and stability? Mini said that the recent problems were attributable to a load balancer that was replaced yesterday, in part because of our post alleging a connection between downtime and the health of the company. Whether or not the company is making sufficient investment in infrastructure is unclear; presumably time will tell. It's also easy to imagine resources being shifted whole-scale into sales while the legacy (free) product gets put on life support. I'm sure the start page product helps with some sales, but I presume that enterprise and marketing sales people help a lot more.

Netvibes raised 12m Euros in August of 2006 and hasn't raised any more money since then. Mini says that while other companies are cutting staff, he's adding people - specifically sales people targeting brand customers in the US and Europe.

I'm not entirely convinced how well the current path is going to serve Netvibes, but Mini says its enterprise product is far less expensive than competitors like IBM - so maybe they can pull it off. I hope so because I want to keep using the company's start page product. Not because it's free, but because it's a very good product.

The long and short of it is that it appears I was wrong - Netvibes is not going down the tubes. At the same time, I'm not entirely convinced that all is well at Netvibes and I am disappointed about the move away from the original vision and towards a brand-centric direction for the company.

What do readers think about Netvibes these days?

Centralized Aggregators:

• Get Satisfaction
• SuggestionBox
• FeVote
• Featurelist

Anyone can start a product or company page on these sites to submit ideas, suggestions, or complaints, which are then voted up or down, Digg-style, and commented on. Companies pay for access to this data, more powerful features, and the ability to "claim" pages and register official employee moderators. Like review sites such as Epinions, conversation happens on these sites with or without you.

Tool Providers:

• SalesForce Ideas Management
• UserVoice
• IdeaScale
• Get Satisfaction
• Kindling

These systems provide similar functionality to that of the centralized aggregators listed above but are controlled and run by the companies themselves. They include features such as ratings (or up/down votes), moderation, the ability to limit the number of votes per user or the access of certain groups, time-limited contests, and automatic searching for duplicate idea submissions.

Integrated Innovation Management Suites:

• Imaginatik
• BrainBank
• SalesForce Ideas Management
• Brightidea
• Spigit

The idea management portion of these suites generally have more robust capabilities, such as weighting the contributions of users according to expertise and trust, creating virtual currency systems, providing enterprise-class security, and customizing captured information. By integrating idea capturing and prioritization into a more robust and sophisticated system, companies can then evaluate the cost of ideas, put ideas through a formal review process, and track their performance from conception to execution.

So which aggregators should you be paying attention to? Which has the greatest reach? The strongest offering? The following rankings are based on estimates culled from Compete, Alexa, Quantcast, Google, Technorati, and the actual features offered in each.

Get Satisfaction

The big kahuna, with over a million unique visitors per month, Get Satisfaction is the most fully featured of the aggregators, and it allows for more flexibility in submission types and more nuanced engagement with customers than any of the others. Users can specify whether they have an idea, question, problem, or praise; and similar submissions are automatically displayed as the user types to avoid duplication.

As an added bonus for businesses, there are also numerous "Net Promoter" data-gathering widgets on company and product pages. Employees can register on the site and interact with customers, noting whether the status of a post is "Under review," "In progress," or "Resolved."

Get Satisfaction suggests a process by which companies can ramp up, too: first, by each company linking to its page on Get Satisfaction; then by putting a widget on its own support page; and finally by signing up for the API to keep customers on its website. Basic pricing starts at $149, which allows up to 10 moderators and 10,000 API calls per day.

An interesting example illustrates the power and pitfalls of this type of system: on Twitter's page, the top-rated idea is for a "Flag as spam" feature, which was posted 11 months ago. An employee then started an official thread asking "How would you prefer to report Twitter spam?" However, Twitter still does not have any spam-flagging capability, and officially it is still, 11 months later, collecting feedback after having received 215 replies. Yes, Twitter still has occasional difficulties simply remaining up, so it is not terribly surprising that this has not yet been implemented.

Get Satisfaction stats:

• Recently hired a new CEO, Wendy Lea, and has raised $2.5 million.
• Claims 13,000 companies, 10,000 products and services, and 1.5 million monthly customers.
• Compete: 1.2 million visitors per month
• Alexa rank: 21,810
• Quantcast rank: 3,269
• Technorati: 4,342 blog reactions
• Incoming links according to Google: 2,000

SuggestionBox

Launched in open beta last year, SuggestionBox uses a five-lightbulb rating system, as opposed to up/down voting; otherwise, it overlaps with Get Satisfaction in a few areas. Users can choose to follow certain suggestions, companies can "claim" their pages, and companies can pass user suggestions through the API to SuggestionBox from their own sites. After signing up with SuggestionBox, companies have the ability to control which suggestions the public sees and to update the status of suggestions. Pricing is $49.50 per month for one suggestion box and one moderator.

SuggestionBox stats:

• Compete: Spiked last May with 30,000 unique visitors per month, but now has about 15,000 to 20,000 per month.
• Alexa rank: 189,345
• Quantcast and Google Trends: no data
• Technorati: 204 blog reactions
• Incoming links according to Google: 264

FeVote and Featurelist

FeVote and Featurelist have not gained traction. The sites are free but have only the most basic features. Anyone can start a suggestion board about basically anything, and widgets are available, but activity and traffic are non-existent. For example, despite having launched two years ago, FeVote has gathered a mere 12 suggestions and 21 votes for the iPhone in the last year.

Fevote stats:

• Compete: On a downward slope since March, to about 1,000 or 2,000 unique visitors per month now.
• Alexa rank: 907,850
• Technorati: 19 blog reactions
• Incoming links according to Google: 33

Featurelist stats:

• Compete: Fluctuating below 1,000 per month.
• Alexa rank: 1,423,469
• Technorati: 20 blog reactions
• Incoming links according to Google: 16

As it stands, Get Satisfaction has the most traffic, strongest engagement, and most robust functionality; and it allows companies the most flexibility in connecting with customers.

Hard questions remain, though. Should your business engage with these tools, and do they provide real value? Will they survive if companies increasingly bring these systems in-house? These are difficult, nebulous questions whose answers depend on your situation and your view on how these tools influence customer opinion and engagement.

Any company itching to dip its toes in this space should first monitor and engage in the conversations on Get Satisfaction and SuggestionBox. If you find you want greater control and want to carry the conversations on your own site, check back here for Part 2 for a look at what the tool vendors have to offer.

Tom Powell writes about innovative applications of customer co-design, outside innovation, and crowdsourcing at Co-Innovative.com. He is finishing his MBA in Product Management and Entrepreneurship at Duke University in North Carolina.

John Donahoe made the very reasonable point that online e-commerce will look like offline commerce: fragmented. Consumers will buy from eBay, Amazon, Walmart.com, Zappos, whatever gets their attention and has the right product at the right price. That rings of common sense.

To illustrate this fragmentation, he told us that the mighty Walmart has only 4% of the market.

For a more extensive discussion of the problems facing eBay's core service, read this very well-reasoned (but long) post on SeekingAlpha.

When queried on these issues, Donahoe simply indicated that the problems did not originate on his watch, that he was aware of them, and that they were complex to solve. That does not seem enough. The bits of insight above may be great, but eBay needs to fix its core service to regain its stature as a leader and give investors a good return. You don't transform a company without fixing the core, and investors clearly feel that eBay needs transforming; that is the message behind a stock price that in the last 12 months trails the NASDAQ and peers like Google and Amazon. eBay is actually in the rather miserable club with Yahoo, as perceived by investors.

PayPal: Jewel in the Crown?

Donahoe contrasted the fragmented e-commerce business with the highly consolidated payments business. Clearly, the latter has greater appeal. One can see why. The payments business is global and dominated by a few players: Visa, MasterCard, and Amex. As the low-cost player best suited to the web, PayPal has enormous potential.

I'm pretty sure I even heard Donahoe say, "PayPal should be bigger than eBay." As he spoke about the global payments system, one could see why.

He described the national banking regulatory challenges, a major barrier to entry. Taking money online is the easy bit, he said. Moving that money in and out of the traditional banking system is hard, because the banking system has to adhere to a maze of local regulations. Donahoe told us that eBay works on penetrating something like 5 to 15 new countries each year. Some, like Japan, remain a challenge.

This is clearly a huge opportunity, but these local regulations are a big barrier to entry. Anyone who has done a lot of international business can attest to how archaic some of the processes are. Wiring money is bad enough, but the processes around letters of credit seem positively arcane, almost 19th-century.

Oh, and a $500 million High-Growth Skype Business

Skype is the eBay business I am most familiar with as a user. We use it all the time here at ReadWriteWeb. It is a core tool for running a small business in which colleagues, clients, audience, partners, and everybody else in the community are all over the world. For entirely selfish reasons, I evangelize Skype to everybody. Now, I want Skype on my cell phone to cut my mobile bills; it is definitely ready for prime-time.

And yes, Skype is a real business. Donahoe told us that Skype generated $500 million in revenue last year, with "high-teen margins" and growth rates of 30% to 40%. Saying "That's not a bad business" got a wry laugh from the audience (all of whom would consider it a totally amazing business). In any other market, that would be a red-hot IPO.

Skype is perfectly positioned for a long recession, too. That already shows in the numbers. In the last quarter, Donahoe told us that Skype-to-Skype grew 73% and Skype Out grew 63%. I can personally attest to seeing many smart people, who had not used Skype previously, see it and say, "OMG, it's amazing."

$500 million was only 6% of eBay's total $8.5 billion revenue in 2008. But with Skype growing at 30% to 40% and eBay's core service hurt by a slow-down in consumer spending, this percentage could change significantly in 2009.

How much could eBay get for Skype, a business that already has scale, good revenue growth, decent margins, and a model and technology that are disrupting the massive telecom market globally? It is not entirely outrageous to think that Skype could become the biggest telecom company in the world at some not-too-distant point in the future. At some point, the IPO market will come back. All of eBay (including PayPal and Skype) is currently valued by the market at $15 billion. How much would the market value of Skype as an independent entity be? More than 6% of $15 billion? I think so.

eBay spinning off Skype was one of the three web-tech market events that I wished for (not predicted) for 2009. It looks possible. Methinks it is simply a matter of timing and market conditions.

The VC Portfolio

As well as being a collection of great but unrelated businesses, a kind of online conglomerate, eBay also looks like a VC with a strange but interesting mix of minority stakes. The most interesting and oft-discussed is its 28% stake in Craigslist. It is clearly not a happy relationship. But that 28% must be worth something.

The Economic Question

The underlying question for everybody at the Accel Symposium was, "What about the effect of the economy on your business?" Donahoe pointed out that they saw the downturn in their PayPal and eBay lines as early as May. Signals from millions of small buyers and sellers are far more reliable than any GDP numbers. So they were able to take corrective action early.

eBay's biggest action was to offer coupons to buyers, to help sellers. As he pointed out, small sellers have weak balance sheets, so a downturn can make them vanish quickly. eBay moved quickly to support its sellers.

Asked if eBay was recession-proof, Donahoe pointed to Skype as being perfectly positioned, but he noted that if consumer spending slows, then even e-commerce is affected. And e-commerce is down.

Time to Fix E-Commerce While it's Down

eBay needs to have a compelling core proposition for e-commerce that unites auction, fixed price, and classified ads. Donahoe pointed out that search is the obvious unifier. But it is not clear how eBay can use this to its advantage.

E-commerce still makes up only 7% of retail. Given the amount of time we spend online and the obvious opportunities, this could grow to 15% to 20%. A big prize awaits here when the economy turns around. eBay has the financial strength to build through the downturn.

Donahoe also painted a vision of mobile e-commerce. It is one that others have painted before: you go into a real-world retail store; see an item you like; scan the barcode to get the price; find a better price online; then decide whether to buy it in the store or online, depending on whether you prefer convenience or lower price.

As he pointed out, this could encounter a bit of resistance. I can envision videos popping up on YouTube of irate shopkeepers throwing out barcode-swiping bargain hunters! Physical retailers will have to adapt, but online folks such as eBay will have to be sensitive to their needs. This will be interesting to watch.

If you think that's crazy - you're wrong. ShareThis is a great example of the kind of company that could become a key foundation for innovation in the next era of the web. If it doesn't sell out to advertisers too quickly or too completely. The company released a new version of its widget today and I took the opportunity to talk to CEO Tim Schigel about where the company is headed in the future.

Little changes can mean tens of millions of click-throughs won or lost for a company like ShareThis. The new widget seems like a real improvement. I especially like the one-click buttons to share items with frequent contacts - I use a similar feature on the StumbleUpon toolbar to email things to my wife sometimes, because it's so much faster than email.

Context

Ok, it's a sharing widget with a fat bankroll. What does it really mean though?

Here's how I see it. If the current iteration of the web is based on everyday people creating and distributing content, many people believe that the next iteration will be based on the use of machine learning to build new layers of value on top of that content. What's hot, with what audiences and what kinds of data parsing magic can we work with that information? Few companies are as well positioned to do interesting things with that kind of data as ShareThis. The company says its service is now live on more than 80,000 sites, from scores of small blogs to some very big brands on the web, like ESPN.com, FoxNews, AccessHollywood and Boston.com.

The company has a lot of opportunity for data-centric innovation and CEO Tim Schigel says that's the direction he's looking to take things. You have to hope that companies like this can pull it off and turn into the platforms they say the want to be - and not just advertising platforms, either.

Schigel says that he's watching OpenID closely and that he was pushing Facebook for something like Connect before the service existed. He also told us that there would "soon" be a way for users to easily export their history of shared items, especially now that ShareThis is putting a new emphasis on bookmarking for later retrieval and not just sharing items. I hope that's all true, but when there are tens if not hundreds of millions of dollars on the table I never hold our breath about such high minded statements being anything more than PR.

In the meantime, though, it's fascinating to think about what ShareThis is going to do with a big pile of user data and a big pile of money.

The Business Plan For Data

ShareThis gets to see a whole lot of interesting things about the ways we share content online. In August the company published a report about the most common tools people use for sharing. The big takeaway? Email still totally dominates online sharing, even through the ShareThis widget. The second most popular method of sharing was for people to publish content into their Facebook news streams. That data told content producers everywhere that if they want to help readers share their content with larger numbers of people, it's important to make email and Facebook as easy to access as possible.

Beyond different methods of sharing, though, ShareThis has obviously got a lot of data about what kind of content is being shared. I asked Schigel whether ShareThis would be sharing this kind of data it collects, in aggregate, with marketers. "That's ultimately where we go with the business model," he said. The company is talking with selected marketers about sharing access to market insights now, but Schigel emphasized that a few conditions needed to be respected. "We need to make sure that publishers can build trust with their readers," he said, "and we need something unique that marketers can't get elsewhere."

What does ShareThis have that Facebook, for example, doesn't have? Schigel says his company can offer platform independence and a much lower price point. By doing nothing but facilitating sharing, ShareThis simply doesn't have the kind of overhead that Facebook requires to run its entire social networking site.

Obviously ShareThis, even with the success its had in spreading its service so far, is going to need to be in a whole lot more places. Part of that increased reach, the company hopes, will come from its developer platform.

ShareThis for Developers

ShareThis already has a developer Application Programming Interface (API) but Schigel says there will be multiple APIs made available soon. The current offering already allows developers to rewrite attributes, like the title, of shared content objects. Hopefully future APIs will give maximum freedom to developers to do things with shared content data that can't even be imagined yet.

Both marketers and developers will soon be getting access to much more sophisticated data streams than mere bulk popularity. Schigel says that ShareThis is filling its Mountain View office with data wonks and PhDs who are aimed at taking ShareThis data beyond the most immediately obvious opportunities, like content recommendation. The company's Principal Scientist, Huitao Luo has worked as a data scientist at LinkedIn, Yahoo! and at the innovative HP Labs. At HP Lou published on research in algorithms developed for cascading classification systems. Recently hired research architect Gordon Rios came from Inktomi/Yahoo, innovative white label calendaring company ZVents and a list of other companies. Rios has a background in data classification, determination of content's international relevance and spam detection.

These are heavy hitters who should offer up some really innovative APIs for the developer community to process user "attention data" and for marketers to monitor trends in interesting and granular ways.

Hopefully it won't all be done in crass service to the interests of advertisers alone. In order to build that trust that Schigel says he wants with publishers and with developers, ShareThis is going to have to offer some of the network effects its capturing to its non-advertiser partners - not just a handy little widget for distribution. That's not unique enough.

Could ShareThis end up turning its little widget into a big company? I wouldn't bet against it. Will Schigel and his crew of scientists also take advantage of the opportunity to facilitate value creation by a larger web of data-centric content and development innovators, thus growing the total pie that the ad market wants a piece of? We can only hope.

Like an increasing number of private companies, Blurb is starting to report its financial results publicly, almost as if it were a public company. This presumably serves the purpose of both reassuring customers that the business is healthy and attracting potential acquirers.

Allow us to quote shamelessly from Blurb's press release (at least it prevents errors):

"Blurb, the creative publishing platform, today reported a year of record growth in 2008 with revenues approaching $30 million. The company reached profitability and achieved nearly 200% year-over-year revenue growth in 2008."

Quiz: which would you prefer: a company with $200 million in advertising revenue that is burning cash, or a business with $30 million in subscription revenue that is profitable? The first describes Facebook, the second describes Blurb. Yes, it is almost absurd to make the comparison. But the point is that old business maxim: revenue is vanity, and profit is sanity.

What Does this Tell Us About the Economy?

On the face of it, not much. Blurb's business is partly seasonal; people buy more during the holiday season. We asked Eileen Gittins, the company's CEO. She sounded almost surprised, not at all triumphant, and generally cautious. Which is a reasonable reaction of anybody doing fairly well in today's economy. Eileen confirmed that January is also looking good: 30% over projections. So this is not just a holiday buying story; it's more about what specifically Blurb offers.

What Does this Tell Us About Blurb's Market?

Eileen attributed the good results to three factors:

1. Pent-up demand to write books. Who doesn't have a book they have always wanted to write? It is now easier than ever to publish (if not write) a book.
2. The cultural shift of people becoming more active contributors to media, as writers as well as readers.
3. The forced leisure that layoffs create, and the desire to do something that one has some control over and can point to as an achievement. This may be exacerbated by the bad times: get laid off from a big job, take three months to write a book about what you know, do it well and you'll be back in demand pretty soon.

There is one simpler explanation that we see. In tough times, affordable luxuries that provide a high level of emotional satisfaction do well: think movies, roses, and booze.

But social media today is a pure mess: it has become a collection of countless features, tools, and applications fighting for a piece of the pie.

Users, marketers, and companies face an incredible amount of noise, too. For every new application that relies on a network, another crops up that helps users manage it. While "eyeballs" used to be the coveted metric, both ad publishers and investors now realize that having smaller well-targeted niches can lead to much better returns than marketing to one large undifferentiated mass of users.

Meaning and connection -- two key anchors of all things social media -- are corroding by the day as people's ability to organize their experiences and find the relevance of their networks declines. Social media, in essence, is bumping up against its own ceiling, no longer able to serve the needs of those living within its walls; and for these reasons, social media as we know it is changing course.

Social Media is Evolving

Social media is morphing into a holistic experience that speaks to people's social needs in new ways. If you are a CEO of a startup who is focusing on the next generation of social media, here are 10 areas you'll need to take into consideration in the coming year:

1. It's About People

We're moving away from "users," "customers," and "shoppers": social media is bringing back the human element to all digital interaction. People now deliberately seek meaningful connection, self-expression, and a relevant and receptive community. Forrester's Social Technographic research and Charlene Li and Josh Bernoff's Groundswell represent a huge step towards a new kind of behavior-driven segmentation, but companies that want to succeed will need to take it further and tap into people's evolving needs, using the social media context as the new baseline.

2. Creating Meaning and Value

Social media will no longer be about features and applications. These have become a dime a dozen. People will be looking to get tangible and relevant value out of their social experience; they'll be looking for meaning and for order. "Social media online is no different from social media offline," said Brent Csutoras at a recent Social Media Club event. People will be looking for ways to keep their networks going regardless of device or platform. They will connect around meaningful topics and have live and simultaneous conversations within parameters they themselves define, which will bring relevance back to their interaction with others.

3. Enabling Convergence

FriendFeed -- now both a destination and an API -- is growing rapidly, despite a miserable wiki-like interface and interactive experience. That's because people are at a loss when it comes to pulling their conversations together from various sources and assigning meaning to them. Companies that deliver beautifully designed, easy-to-use, searchable, flexible, aggregating platforms will become more important than any social media tool by itself. Deb Schultz, a San Francisco-based web strategist, compares social media to an art exhibit and says people will "curate their live presence through the web ecosystem as needed." Noovo and Zannel are examples of early attempts to enable this.

4. Building a Truly Cross-Platform Experience

The iPhone experience has changed the playing field for users, companies, and developers. In Q1 of 2009 alone, Apple sold 4.4 million iPhones, and Google's Android and the new Palm continue to build on the cross-platform, application- and service-driven model. In the new landscape of social media, people are seeking solutions that seamlessly cut across mobile, web, and live interaction, hopping on and off them like double-decker buses, all with the same pass.

5. Creating Relevant Social Networks

People will create, join, and seek social networks that enable them to have meaningful and relevant experiences with each other. They will measure their return on investment (time spent, level of disclosure, etc.) in replies, comments, their ability to influence, and the value of their learning. Rachel Masters, VP of Strategic Relationships at Ning -- a social network that grew a massive 388% in 2008 -- says, "the Internet is confusing because it can be used to replicate almost any previous medium. Ning addresses this by delivering social networks that allow people to connect around the things they love."

6. Innovating in the Advertising Space

Ad publishers and the attached ecosystem will continue to lose revenue until they realign their understanding of what appeals to people who are conversing, connecting, and expressing. The next phase of social media is a gold mine of targeted niche demographics. Nuconomy, an Israeli startup, experiments in creating and delivering highly targeted, dynamic display advertising. Shahar Nechmad, Nuconomy's co-founder and CEO, says that, on average, Nucomony customers see six to nine times higher click-through rates on targeted ads than on non-targeted ones. "People do click on ads and buy things in the same session," says Nechmad. Ad agencies and publishers that are able to quickly realign their thinking and create an innovative and relevant product discovery experience will gain significant competitive advantage.

7. Helping People Organize Their "Old" Social Media Ecosystem

As aggregating platforms enter the field, people will seek to bring order to the endless bits of information available to them. Video tagging, conversation archiving, taking cloud computing to the next stage, and making search more relevant are some of the new baseline requirements. These represent a significant opportunity for companies willing to undertake this massive endeavor.

8. Connecting with the Rest of the US and the World

With some exceptions, today's active social media users are early adopters. In the next one to two years, the benefits of social media will cross the chasm and reach the mainstream, not only in the US but around the world -- especially in community-driven regions like Southeast Asia and countries like Brazil, Russia, and Germany. Companies will need to understand the explicit and implicit differences between adoption patterns in different countries and adjust their products to meet these different needs.

9. Preparing for New Social Media Jobs

It has been a harsh year for marketing firms. Companies are looking to divert marketing dollars to more targeted social media destinations. And this is just the beginning. David Spark, founder of Spark Media Solutions, says that businesses will need to go beyond paying people to Tweet or put up a Facebook page. Social media's new job descriptions will call on subject-matter experts who can plan for relevant interaction within networks and aggregating platforms and bring together products, services, and people.

10. Making Money

The next phase of social media will bring plenty of lucrative opportunities. With the rise of aggregating platforms, social networks, and new mobile and location-based features, we're bound to see an increase in targeted and personalized ads, "freemium" packaging, revenue sharing between strategic partners, and a flow from the offline world to online social engagement (such as when real goods complement virtual ones).

Social media has forever changed the way people use technology to interact with others, but it can no longer satisfy people's needs in its current form and must change course.

The new form of social media will be about creating "whole products" and complete experiences, all in real time, across the web, mobile, and live. Each user will be able to create his or her own experience using tools, features, and apps that magically coalesce. People will be able to move seamlessly through information that is available to them anywhere, anytime, sharing rich content with a rich set of groups and networks that they themselves define. Innovative companies that are able to listen to these needs and deliver products based on them will not only survive but thrive in the coming months and years as people eagerly advance on the inviting waters of the new social alchemy.

This is a guest post by Paul Miller, a Semantic Web and Cloud Computing expert who was most recently a Technology Evangelist at UK technology company, Talis.

Not merely some game of buzzword bingo on an unprecedented scale, cloud computing is coming into its own, and it is becoming increasingly easy to see the opportunities for a significant shift in the way we access computational resources and to recognize that the walls separating organizations from their peers, partners, competitors, and customers will become ever-more permeable to the flow of data through which those distant machines will compute.

There are many areas to understand that have already been ascertained in related fields, and many ideas unique to this space to discover. One early challenge is to carve a distinct niche for the place we are moving towards with such rapidity. Far more than "just" a cloud, it is an evolutionary cycle beyond the playful flippancy that diminishes so many of Web 2.0's poster children, and it is difficult to relate to mainstream misconceptions of the semantic web's complexity. Yet this new place is greater than the sum of its parts. So do we sustain the already ephemeral notion of cloud computing? Do we appropriate the "next big thing" label of Web 3.0? Or do we need a fresh attitude towards business computing's apparently insatiable desire to apply labels?

First, though, let us consider the shape of this thing that is taking on more substance with each passing day.

Reporting on last month's Web 2.0 Summit in San Francisco, CNET's Dan Farber notes that "the cloud was omnipresent," before closing his report with the observation that "cloud computing won't be very compelling without what is variously called Web 3.0 or the semantic web."

Indeed.

For too long, the emphasis in cloud computing circles has been almost exclusively on the provision of rapidly scalable and ad hoc remote computing on top of cost-effective commodity hardware. The cloud play by Salesforce, Amazon's EC2, and the rest has been dominated by the implicit assumption that these cloud-based resources are an extension of the corporate data center; a way to simply reduce the costs of enterprise computing.

There is value down this road, but there are bigger opportunities.

Nick Carr is among those who fear that a small number of players may come to dominate the provision of cloud resources. He outlines many of these arguments in his latest book, The Big Switch, and more recently had an interesting discussion with Tim O'Reilly on the topic. Justin Leavesley shares some of Talis' views on the economics behind all of this over on Nodalities, broadly agreeing with Tim O'Reilly:

"It's pretty clear that utility cloud computing is highly capital intensive so it should come as no surprise that there are powerful economies of scale to be had. But the bottom line is that you are talking about plant and power. These are rival goods, scarce resources that are created and consumed. This is not different from many utility industries with one exception: the distribution network has global reach, already exists and is very cheap compared to existing utility distribution networks. It is a lot cheaper to access a computing resource on the other side of the planet than it is to send electricity or gas across the globe... [So] what is to stop economies of scale turning this into a global natural monopoly?

"Actually, unless there are some large network effects, quite a lot stops single companies ruling entire industries. For a start, without network effects, economies of scale tend to run out: the curve is usually U-shaped. Telecoms, gas, rail companies have strong network effects from their infrastructure -- it makes little sense to have duplicate rail networks or gas networks in a country. Utility computing does not have this advantage because the distribution network is not owned by them."

Continuing the conversation, Carr summarizes the usual widely held perception of cloud computing nicely:

"The history of computing has been a history of falling prices (and consequently expanding uses). But the arrival of cloud computing -- which transforms computer processing, data storage, and software applications into utilities served up by central plants -- marks a fundamental change in the economics of computing. It pushes down the price and expands the availability of computing in a way that effectively removes, or at least radically diminishes, capacity constraints on users. A PC suddenly becomes a terminal through which you can access and manipulate a mammoth computer that literally expands to meet your needs. What used to be hard or even impossible suddenly becomes easy."

This is quite true, but it continues and further entrenches the misapprehension that the cloud is little more than an adjunct to the corporate data centre, a misapprehension that we shall get down to challenging in a moment.

First, though, there is a growing recognition that today's market leaders will inevitably need to become more interoperable if this business segment, and they, are to grow. The proprietary nature of their offerings today may allow them to innovate ahead of the standards process (which will be shaped in large part by the lessons they learn), and the relatively high cost of switching to a competitor today may give each the critical mass on which to invest and grow; but the characteristics of the current market are clearly the characteristics of a nascent market: computing's new Wild West. As so often before, standardization, true competition, mainstream adoption, and commoditization will all follow as we move towards phases 2 and 3 of Gartner analyst Thomas Bittman's intriguing analysis of the "evolution of the cloud computing market." Similarly, Erica Naone offered a useful overview of cloud computing's open-source component in Technology Review last month. None of the projects she covers are a significant challenge to Amazon's EC2, Microsoft's Azure, Salesforce's Force.com or Google's App Engine... yet. But together, they help to keep these commercial entrants honest and remind all of us that switching costs can be brought very low indeed if the pain of the status quo becomes too great.

Writing "Welcome to the Data Cloud?" for ZDNet in October, I began to explore the important role that data could and should play in the cloud:

"Just as 'we' used to duplicate and under-utilize computational resources, so we do something very similar with our data. We expensively enter and re-enter the same facts, over and over again. We over-engineer data capture forms and schemas, making collection exorbitantly expensive, whilst often appearing to do all we can to limit opportunities for re-use. Under the all-too-easy banners of 'security' and 'privacy' we secure individual data stores and fail to exploit connections with other sources, whether inside or outside the enterprise.

"In a small way, the efforts of the Linked Data Project's enthusiasts have demonstrated how different things should be. The cloud of contributing data sets grows from month to month, and the number of double-headed arrows denoting a two-way linkage is on the rise. Even the one-way relationships that currently dominate the diagram are a marked improvement on 'business as usual' elsewhere on the data web; even in these cases, data from a third party is being re-used (by means of a link across the web) rather than replicated or re-invented. Costs fall. Opportunities open up. Both resources, potentially, improve. The strands of the web grow stronger."

It is here, in the use and reuse of data, that the potential of the cloud will be realized. Back to the previously cited conversation between Nick Carr and Tim O'Reilly, O'Reilly himself comes very close to saying so:

"In short, Google is the ultimate network effects machine. 'Harnessing collective intelligence' isn't a different idea from network effects, as Nick argues. It is in fact the science of network effects -- understanding and applying the implications of networks.

"I want to emphasize one more point: the heart of my argument about Web 2.0 is that the network effects that matter today are network effects in data. My thought process (outlined in 'The Open Source Paradigm Shift' and then in 'What is Web 2.0?,' went something like this:

1. The consequence of IBM's design of a personal computer made out of commodity, off-the-shelf parts was to drive attractive margins out of hardware and into software, via Clayton Christensen's 'law of conservation of attractive profits.' Hardware became a low margin business; software became a very high margin business.
2. Open-source software and the standardized protocols of the Internet are doing the same thing to software. Margins will go down in software, but per the law of conservation of attractive profits, this means that they will go up somewhere else. Where?
3. The next layer of attractive profits will accrue to companies that build data-backed applications in which the data gets better the more people use the system. This is what I've called Web 2.0.

It's network effects (perhaps more simply described as virtuous circles) in data that ultimately matter, not network effects per se."
(my emphasis)

Talis CTO Ian Davis would appear to agree, commenting:

"People need to be investing in their data as the long-term carrier of value, not the applications around them... The data is more likely to persist than the software, so it's important to get the data right and take care of it."

Salesforce CEO Marc Benioff, too, used his Dreamforce User Conference this month to move a company long associated with the "data-centre extending cloud" firmly in the direction of embracing data and the network. As Krishnan Subramanian noted on Cloud Ave before the keynote:

"Till now, the Force.com platform served business users to develop apps that can be used internally within an organization. They have to tap into Force.com APIs from outside platforms to offer customer-facing web apps. With the new initiative, it becomes easy for customers to allow the Internet users to 'interact' with their data."

Over on VentureBeat, Anthony Ha had more:

"Salesforce.com wants to become an even big player in the cloud computing market with a new service called Force.com Sites, which allows companies to host public-facing web applications in the Force.com platform. That means Salesforce --- nominally a maker of customer relationship management (CRM) software, but also an increasingly important platform for business-related applications --- is moving closer to direct competition with cloud giants like Amazon Web Services and the Google App Engine."

Locked away within an organization and only accessed by that organization's applications, data cannot be put to full use. Much of the value in each individual datum lies in comparing it to other measurements, in delving into detail, and in pulling back to observe the bigger picture.

Organizations that believe that either the big picture or the detail resides in their own systems alone are woefully misguided. Even the most specialized, proprietary, and confidential of data only reveal their true value when put in context, and that context is all the richer when informed by numerous perspectives.

Cloud computing, and the various SaaS movements, have finally brought us to a place where the fiercely guarded and tightly delineated boundaries between the organization and those outside it may become permeable in ways that should benefit the organization rather than threaten it. Data is just a resource. In the terminology of Geoffrey Moore, most data are often mere context, and there are savings to be made both in reusing the data of others and in re-selling necessary context to those prepared to pay. Some data, of course, is core to the business, and this may continue to receive the same reverence and protection that we misguidedly apply to the entire database today. Even here, though, the opportunities afforded by (controlled?) sharing may outweigh any desire to maintain data protectionism.

The language of Groundswell offers opportunities to go further, to embrace and exploit the behaviors and motivations of customers and the wider web.

There is clearly far more to say in clarifying this view of both the components and the whole, but at over 2,000 words, this post has perhaps gone on long enough.

For now, then, we should conclude by asking what role the semantic web has to play in any of this. The semantic web, with its unadulterated recognition of the primacy of the web's hyperlink? The semantic web, designed from the outset to convey context and relationships derived from data spread across the web? The semantic web, supported by technologies that operate openly and on the scale of the web?

Isn't it obvious yet?

Returning to the Web 2.0 Summit with which we began, another presentation was from Kevin Kelly, founding editor of Wired Magazine. Steve Gillmor and Nicole Ferraro reported on his presentation at the time, and the video was subsequently shared online, echoing Kelly's earlier presentation (which I greatly enjoyed), in which he argued:

"You have to be open to having your data shared... which is a much bigger step than just sharing your web pages or your computer."

Yep, here we go, on a journey toward Kevin Kelly's "World Wide Database," which will take in a lot of the shifts facing enterprise computing along the way.

This is a guest post by Paul Miller, a Semantic Web and Cloud Computing expert who was most recently a Technology Evangelist at UK technology company, Talis.

Jott moved to a paid model following a successful free beta. I spoke with Jott CEO John Pollard to learn how they did it and how it is working out for them.

Jott still has free service, but it's been put together such that if you are a frequent Jott user, you'll be very tempted to upgrade. The upgrade itself is less than $4 so I suspect many people will go for it. Jott has a variety of plans to choose from including free, basic, pro, pay-as-you-go, etc.

The company based these plans largely on user behavior and lots of data. When they started the company, they knew they would ultimately have a free and paid version, but had to learn the rest along the way. For example, they had to find out if their customers were home makers, road warriors, students, professionals, etc.

Some of the factors they experimented with during the beta program included turnaround times, length of recordings, and features. By collecting data around user behavior and usage, they were able to model scenarios and identify trends. They then used focus groups, the Jott user group, and conjoint analysis (a very cool survey technique requiring users to make trade-offs on product features versus price) to come up with the different packages. They were very confident that some professionals wouldn't want an ad-supported service, and the research confirmed it.

As you can imagine, they overcame significant challenges along the way. While many users understand that Jott has to put food on the table, there were users who were shocked that a company dare ask for money. Personal note: this is both a common and ridiculous sentiment that has grown as more "free" things pelt us, but that is a conversation for another day.

John and company decided to be extremely transparent about the process and spent significant time in their forums, hitting the blogs, and using other marketing mechanisms to tell their story and let users know what was going on. John admitted they could improve on the communication front, but they did a solid job. The communication philosophy was to tell the users what was coming, tell them when it was coming, and explain why - as many times and in as many places as they could.

The company is very pleased with the conversion process so far. They are apparently hitting their goals and on plan. One pleasant surprise according to Jott is the percentage of people selecting annual plans; John said they are getting 10 times the number of annual subscribers that they expected. I'm not surprised as I'm sure a large percentage of Jott users are business customers, and this is the most efficient way to get something expensed; although this is pure speculation on my part.

John has good advice for other companies embarking on this journey. First, talk to your customers as much as possible. Really talk to them and understand the problem you are trying to solve and how they use the product or service. Second, utilize web-based tools like conjoint analysis to gather quantitative information to make decisions. Finally, try to be transparent and don't surprise your customers; they hate that. If you build something that people want and value, you can ask them for money and it is good business.

Conclusion

What is your position in the Enterprise 2.0 market. Do you work in IT in a large Enterprise? Do you work for a large incumbent Enterprise IT vendor? Do you work for a startup that is going to change the Enterprise world? Are you writing about this rapidly emerging market? Do you have unique insights or research to share? We would love to hear from you in the comments and maybe as a Guest Author. Email us if you're interested in writing for ReadWriteWeb's Enterprise Channel.

You can subscribe now to our special RSS feed for the Enterprise channel.

But a new report from PubMatic appears to indicate otherwise. Their May AdPrice Index, which was prepared by independent statisticians Dr. Albert Madansky and Dr. Michele Madansky, indicates that ad prices are starting to drop.

The report found that ad prices (based on effective CPMs) in April across all sites fell an average of 23%. This was most acutely felt by large sites (over 100 million page views per month), led by social networking sites, which saw eCPMs plummet 47% from March to April. Medium-sized web site monetization was essentially flat, while small sites (less than 1 million page views per month) saw modest gains month-over-month.

Social networking eCPMs sit at 19 cents, according to the AdPrice Index report, below January lows of 22 cents. The technology sector was basically flat from month-to-month, but still well off beginning of the year highs.

This all could indicate that a general US economic downturn is starting to be felt on the web. While the study didn't look specifically at search ads -- which analysts have said would be the last to feel the pain of a recession -- and it didn't differentiate between display and text ads, or between eCPMs from ad network to ad network, it is a general indicator of a slow down in the online ad market. Granted, this is only a couple of months of data, so it would be hard to create concrete trend predictions from it.

PubMatic's AdPrice Index is made up of over 3,000 web sites, about 85% of which are based in the US.

Now enterprise mashup platforms, such as Presto Wires from JackBe, are starting to gain traction. In January 2007, an Economist Intelligence Unit survey (PDF - please note that this is a separate report than the Forrester report mentioned elsewhere in this post) revealed that mashups were the most popular traditional web 2.0 technology in the enterprise, with 64% of companies saying they already use or planned to use mashups within the next 2 years.

Mashups come in three distinct flavors in the enterprise, says Forrester:

• Presentation layer mashup. This is the most simple variety. Presentation layer mashups present content from disparate sources together in a unified view. A start page like Netvibes would be an example.
• Data mashup. More complex than presentation layer mashups, data mashups "combine, manipulate, and tie together disparate data sources to present a unified view." An example would be Twittervision.
• Process mashup. Says Forrester: "The most complex of the three, process mashups allow users to mashup not just data sources but also business processes themselves, customizing process design and invoking business logic across multiple applications."

Forrester believes that the enterprise mashup market will hit a tipping points in 2009-2010 and will fold into the IT landscape by 2013. "As a result," writes Forrester, "we expect traditional collaboration and productivity vendors like IBM and Microsoft to ultimately come to dominate the mashup platform market, rolling mashup platforms into major products like SharePoint and the Lotus application suite."

The sample set for the survey consisted of 1,000 young people suckered into answering questions and viewing ads at the "analyst" company's website, Brandport.com, and 500 Facebook users - for a total of 1500 respondents. Perhaps our headline should then read "Young Facebook Users Think Facebook is #1." The release is here, I found it via Kathleen Mazzocco.

Last year's #1 spot was held by MySpace and presuming the study surveyed 1/3 of its respondents on Facebook then as well, this is a big change. I can say anecdotally that everywhere I look I see laptops (other than mine) on Facebook all the time. You can read our in-depth comparison of MySpace and Facebook here.

Gender Differences

Gender differences in the survey were marked; use of social networking sites was twice as high in self-identified women as it was in men, only 33% of women said they were satisfied to use just one social networking site and MySpace was the #2 favorite for women while falling out of the top 5 for men.

The survey's authors say they believe this shows that the social networking world is set to change drastically when today's youth replace contemporary adults in the workplace. Social networking is currently believed to be much more common among adult men.

So what market segments are in need of more products to fill them out? Here are ten I identified from eConsultant's list, but I'm keen to get your feedback on this. Of course I chose ten because that gives me the chance to do a 'top ten' post, a la Guy Kawasaki ;-) In no particular order, here they are:

• Community-building services - overlaps with local; examples: craigslist, backfence, Oodle. There is a lot more that can be done to bring local communities into the 2.0 digital lifestyle.
• Cooperative Distribution Services - e.g. BitTorrent; I'm no expert on P2P, but 3 products listed in eConsultant seems a little light to me.
• Financial Services - has plenty of contenders, but I read/hear hardly any buzz about them in the blogosphere; if you're talking about 'real world' needs, finances is right near the top of the list (as opposed to blogging, organizing photos, etc)
• Game Services - only 9 are listed in eConsultant...
• Grassroots Services - community and charity projects; there are some excellent services already (KatrinaList, OurMedia, etc), but again seems like a lot more could be done. You could also include Non-profit services with this.
• Mobile services - already has plenty of contenders, but I'm including it because mobile is undoubtedly going to be a growth segment as the mobile Internet matures.
• Project Management Services - even though Basecamp has seemingly a lock on this market, I'd like to see more such products from other companies. Indeed I'd like to see more innovative Web Office solutions in general - web-based office apps that really push the envelope. Like Zimbra, JotSpot Tracker, Morfik.
• Publishing Services - publishing as in paper or e-books... now this is really a market I'd like to see others enter; Lulu.com is my current favorite. e.g. how about a service that lets people create their own PDF books or reports and charge for them on a website (a la the 37Signals book)?
• Streaming Services - i.e. Online media/music/video streaming services; this media market looks ripe for growth.
• Wi-Fi Services - only two listed in eConsultant so far.

Those are my initial selections, but interested to hear some feedback about what web 2.0 markets you think are underserved - and perhaps under-hyped (yes there is such a thing).