ReadWriteWeb

Every year in December Read/WriteWeb does a Best Web Companies round-up. This is the 4th time and, like last year, we're splitting it over two posts. In this post we'll announce the Best Web BigCo of 2007 and later in the week we'll announce Best Web LittleCo and Most Promising Web Company or Innovator. These will be selected by the Read/WriteWeb writers, but at the end of this post we'll be asking for your input for the LittleCo awards.

Last year's Best BigCo was Google, an honor it also won in 2004. In between, in 2005, Yahoo was adjudged Best Bigco. So can Google win the title for a third year - and become the Internet equivalent of the Chicago Bulls in the 1990's? Or will one of Yahoo, Microsoft, Amazon, eBay, Facebook or another BigCo take the silverware (metaphorically speaking)? Read on to find out...

And the Winner is...

The Read/WriteWeb authors were unanimous in our decision, but it was a close contest between two BigCos. You can probably guess that one was Google, because it's been another bumper year of innovation and acquisitions at the Googleplex. All through the year we've been delivering the Weekly Wrapup of Web tech news, reviews and analysis - and seemingly every week there was something new about Google. But there was another company that really came of age this year; and more importantly it was the catalyst for some important Web trends. Last year this Silicon Valley based company was not among our BigCo list - it was shortlisted for Best LittleCo! In 2007 that all changed though. And by the end of the year, it had done enough to even trump Google as a big influential Internet company. The winner is:

Research firm Borrell Associates predicts that 2008 online spending for local advertisements will jump 48% to $12.6 billion driven by a demand for paid search and video ads, according to a report on NewsFactor. Search ads will make up the brunt of the local online ad spend in 2008, says Borrell, doubling to $5 billion. Locally targeted video ads are also expected to experience massive growth and rake in up to $1.3 billion.

While Borrell's numbers don't line up with the predictions of other research groups (who generally predict slower growth in the online local ad segment), nearly every report indicates the same thing: local ad sales are on the rise on the Internet. The Borrell report reveals that the growth is mostly being experienced on pure-play Internet sites, while local media outlets are losing market share. Further, the report predicts that "key advertising segments for 2008 will continue to be the Big 3 classified categories of automotive, recruitment, and real estate, with online political marketing holding promise for local sites as state and presidential campaigns heat up."

LinkedIn just announced two new things: 1) a new Beta home page with a news feed; and 2) a developer API. Marshall Kirkpatrick covered the announcement this morning on Read/WriteWeb. I was given a background briefing by Adam Nash, Sr. Director of Product at LinkedIn, so in this post I'll explore more about what the announcement means for LinkedIn's user base - and how it compares to Facebook.

Although the news today is fairly ho-hum, what was new and interesting was that LinkedIn claimed a demographic that compared favorably to Wall Street Journal (WSJ) - LinkedIn has an audience that is both younger (41 vs 48) and richer ($106k vs $98K). LinkedIn was also naturally crowing about their growth (189% for year ending Oct. ‘07) and the chart from Nielsen which shows comparative Facebook growth at 125%. Note that Facebook growth is from a higher base and the law of large numbers applies, but Facebook has always crowed about their growth rates vs the larger MySpace, so they have to live with growth rate comparisons to LinkedIn now.

Getting that kind of growth with the younger/richer demographic is significant. What is the average income of a Facebook user? What is the growth rate of WSJ online?

If the rumours of negotiations with NewsCorp are true, I can imagine these numbers being used to some effect.

Four major use cases for LinkedIn

Before getting into the changes LinkedIn is announcing, it is interesting to look at the four major use cases for LinkedIn and use that to assess how well their direction fits the market needs:

This article is part of a regular series by Matt Rogers, co-founder of Aroxo, on the topic of bootstrapping a startup. See also his previous posts: How to bootstrap your startup and How to create a web app.

A really effective way of bootstrapping your start-up is to offshore and outsource your development. But doing this also carries risks, how can you be sure that you are going to get a developer who'll see it through and has the right experience? This post lays out an effective process to find the right developer.

From starting the search, to the first developer writing code, should take around 3-5 months and there may be further delays whilst you complete your documentation. In this article I'll talk you through what you should be doing at each stage, and what the objective of each stage should be. Here's an overview of the process:

• Build a long list of development companies
• NDA all the companies on the long-list
• Issue a Request for Information (RFI)
• Analyse responses and short-list the developers
• Issue a Request for Quotation (RFQ)
• Analyse responses and select a preferred vendor and a spare
• Negotiate contract with preferred vendor
• Commence development based on your documentation

This is a long process, and therefore I've split it up into 4 sections. These will be posted each week for the next four weeks. Regular readers of this series can relax: the whole lot has been written in advance, so there won't be any month long gaps in between!

In a comment on our recent post The Digg Effect, C. Weng pointed to an e-book he has written called The Web: Hidden Games. It is available for free on Lulu.com. Weng commented that his book reveals "how websites such as Digg, Youtube and Facebook can be viewed as games (even though they weren't designed as such), and how this perspective is beneficial to both web designers and users."

I downloaded the e-book and have started to read it. This description of Digg as a game rings very true:

"So just how exactly is Digg.com a hidden game? Certainly, it has no swordwielding heroes who save fantasy worlds from evildoers, but it does have more characters than in any video game. With millions of users, Digg has a wide array of personalities contributing to the community. This makes it like a massive multiplayer online roleplaying game, just without the slaying of monsters. There is a clear goal: to get to the front page, and there are obstacles: not getting dugg up and having to keep trying multiple times. There is fierce competition between all Diggers for that top spot. Sometimes, they even attempt to discredit others’ posts by commenting on poor grammar, false information, and duplicate stories. Strategies are used to defeat other players and they are numerous. Just as many plans for Digg domination through friendship exist though. Seeking out the different users and adding them to the “friends” list is among the most popular and most successful methods. In the end, a win is only when a story has hundreds of diggs, regardless of how you go about it. Everyone is striving to be the best at what they do and this keeps them coming back to Digg for more."

The e-book goes on to tell you how to "win" at Digg and notes that "like all games, Digg’s system can be cheated." It also compares YouTube to chess: "there are an infinite number of ways to win in YouTube but it only occurs under certain conditions. Every single method, strategy, and theory leads back to the essential factor: getting people to view your videos." And as for Facebook, it is compared to The Sims: "The object of the game is more to monitor or to guide characters in daily life rather than to win at something. There’s no simple goal in sight but it is all about the process of playing."

It's a fascinating e-book and thanks C. Weng for making it freely available on Lulu!

The NY Times reports today about Coca-Cola's new virtual world website. Coke has set up an island called CC Metro in the virtual world There.com (a similar site to SecondLife, but with more controls). NYT reports that at CC Metro, Coca-Cola customers can set up avatars, and "buy clothing and accessories for their avatars using reward points culled from codes on Coke bottle caps". The site also lets users upload videos, create music mashups and play games. You can access this at MyCoke.com.

As PaidContent notes, Coke has been busy tapping into social media over the past couple of years. It ran a YouTube-like video channel, The Coke Show (which closed last summer), began a $1 million branding campaign on MySpace, and is currently working on two marketing programs with Facebook. Also we've noted in the past on RWW how Coke has adopted web 2.0 trends - e.g. Coke Poland's 43Things clone.

NYT points out that "Coke was an early mover in the realm of virtual worlds, viewing them as ways to engage their customers and build their brands." Five years ago, the soft drink giant opened a world called Coke Studios on myCoke.com.

Interesting though, Coke has been using the Web as a 'virtual world' since the very beginning. In 2004 I wrote an article for Digital Web Magazine, noting that Coca-Cola’s Web site in 1996 was styled as a “virtual museum”. Back then Coke presented its Web site as a “world” of games and entertainment, a “place to be”. Screenshots after the jump...

By Alex Iskold

Marketing guru and blogger Seth Godin is also known for his Web 2.0 Traffic Watch List on Alexaholic. This list tracks the changes in Alexa traffic for about 1000 Web 2.0 companies. For example, MySpace and YouTube are numbers 1 and 2 respectively (although check our previous post, which has YouTube in the top spot). While there has been a lot of skepticism about the precision of Alexa ranking, particularly because the ratings can be bought or gamed, for a large pool of popular web sites it can adequately be used as a relative measure of popularity.

Here is the latest Seth Godin Alexaholic top 10 list:

Lloyd Sakazaki has written a good overview of recent trends in global websites. It is based on Alexa data, a stats source which comes under regular fire for its faults (most recently ex-Netscape boss Jason Calacanis took aim). Nevertheless, there are some interesting underlying trends in the Seeking Alpha article. Not new trends, but well stated.

Over a two year period (Nov 2004 - Nov 2006), there have been 5 new websites enter the top 15 of Alexa in reach - myspace.com, live.com, youtube.com, orkut.com, wikipedia.org. Two of those are now owned by Google, which of course has shown significant growth of its own accord over the past two years.

The overall trend is that user-generated content is the defining feature of all of the new top 15 sites - except maybe live.com, which is basically just a replacement (sometimes a duplicate) of other microsoft properties in Alexa. So whether you call this current era of the Web the Read/Write Web, or Web 2.0, or whatever - the proof of how it is different is right there in those alexa stats. Also as Sakazaki nicely points out, the success of search in this era is derived from the growth in user-generated content - since there is so much content nowadays.

Looks like the Web 2.0 Naysayers are starting to drown out those of us who've been preaching the 2.0 Gospel.

Joel on Software, who has a lot of influence in the programming world, comes down hard with his post entitled Architecture Astronauts Are Back:

"The term Web 2.0 particularly bugs me. It's not a real concept. It has no meaning. It's a big, vague, nebulous cloud of pure architectural nothingness. [...] I hereby pledge never again to use the term "Web 2.0" on this blog, or to link to any article that mentions it."

Yikes! Then Dare Obasanjo, fresh from asking a thousand and one questions at the Web 2.0 Conference, adds:

"I am interested in discussions on the Web as a platform and even folksonomies (not tagging) but the marketplace of ideas has been polluted by all this "Web 2.0" garbage. Once again, I've flipped the bozo bit on Web 2.0. Like Joel, you won't see any use of the term on my blog or in items I link to from now on."

Oh and The Register is having a whale of a time mocking Web 2.0. This is the latest from "Andrew Orlowski in San Francisco":

"Web 2.0 is made of ... * Badger's paws * A magic swirling ship * Javascript worms * Recycled copies of Esther Dyson's Release 1.0 newsletter * Never mind, just give us the money"

But really, there's only so much unconstructive criticism I can bear. I'm a bit odd like that, but I hate reading cynical things - even if they're witty. So how about I finish this post with something that actually contributes to the Web 2.0 discussion, whether or not you think Web 2.0 is bullshit. Dave Winer has some thought-provoking questions:

"Isn't it interesting that between the supposed 1.0 (pet food companies doing high tech IPOs) and 2.0 (build to flip the Flickr of evrything) we changed millennia? Are we still creating monocultures?"

The serious and worrying thing for me is that I'm writing a book about Web 2.0. But then I believe there are a great many things of value in Web 2.0 and that's what keeps me going. My job is to distill all the signal from the noise - and most of the noise is coming from the anti-Web 2.0 brigade currently. I am also trying to pin down the long-term trends for the Web, together with the real disruptive things that are changing the Web.

Oy. So how was the TechCrunch party last night?

Now that Web 2.0 is all the rage and whole websites are being devoted to it, I feel it's time to get my due as being the first blogger in this space. Therefore from now on, I'd like you all to refer to me as the "Father of Web 2.0" whenever you link to me.

Now, I realise that I am not actually the father of Web 2.0 - it was probably Tim O'Reilly or John Battelle who coined the term. But the Internet never lets the truth stand in the way of a good meme. So I see no reason why y'all shouldn't start referring to me as The Father of Web 2.0... you know, around the blogosphere.

Here are some examples of how you could slip this into your blogs:

- "Richard MacManus, considered by many to be the Father of Web 2.0..."

- "An interesting conversation has been brewing over at Read/Write Web, home of the Father of Web 2.0..."

- "Richard MacManus, widely hailed as the Father of Web 2.0..."

Indeed it seems Google already recognizes me as the Father of Web 2.0. Nevertheless I could use your help to spread the meme even further. ;-)