More and more magazine publishers are signing up with Apple to offer subscriptions through their iPad apps, including Conde Nast — which rolled out in-app subscriptions for Wired and GQ today — and Hearst. The appeal of that method is obvious: Apple handles the details, and publishers get to keep (most of) the money. But there also seems to be a growing wave of interest in doing an end-run around Apple and using HTML5 and the open web to offer a magazine experience. As other tablets emerge in the market, will more publishers decide to keep their options open and go with the web instead of Apple’s walled garden?

We’ve already seen some magazines experiment with web-based apps instead of the Apple version: Playboy was the most recent example — but its choice was likely dictated as much by the adult-rated content in the publication as it was by any commitment to the open web vs. the closed app economy. Fortune magazine has also announced an HTML5 web version of some of its content, although it is only a specifically targeted feature and not an entire magazine.

There have been other experiments as well, including a “Chrome” version of the New York Times’ web app, which effectively duplicates the user interface of the full app but inside a browser, and a beta feature The Huffington Post launched called NewsGlide that offers something similar for that site. And some publishers are also apparently interested in working with OnSwipe, a startup we profiled recently that offers an easy HTML5 platform incorporating touch interface elements and other features. Founder Jason Baptiste’s motto is that “Apps are bull****” when it comes to content.

Meanwhile, Jeff Sonderman at Poynter reports that a German design team has come up with a full HTML5-based magazine prototype called Aside, which offers an app-like experience in almost every way, but inside a user’s browser:

The Aside “app” has all the elements you would expect from a magazine app, including videos that play inside the content, fly-out menus, page-flipping animations, swipe effects and so on. Unlike many apps, the images can be zoomed as well — and the magazine doesn’t require a gigantic download that takes hours to complete, the way some apps such as Wired’s do. There is some lag in the Aside demo, but it is only a prototype after all, and it is almost indistinguishable from an iPad app in look and feel.

Whether any of these solutions will appeal to mainstream publishers remains to be seen, however. There’s no question that getting into bed with Apple has some fairly substantial benefits for content owners — for one thing, apps are a potential revenue generator, something many publishers are desperate for (although actual subscription numbers have proven to be fairly lackluster for most). And subscribers have also proven to be surprisingly willing to divulge useful marketing information about themselves via these apps, something that was a bone of contention when Apple first launched subscriptions.

All that said, however, a partnership with Apple can be a Faustian bargain for content owners. Not only does Apple get to keep 30 percent of the subscription revenue, which for some smaller publishers can mean the difference between life and death, but it also gets the ultimate say over what content can appear in an app and what can’t. The creators of the Aside prototype mention this specifically as a selling point of using the open web to publish: no one can tell you that your content is not suitable.

For now, the benefits of an Apple relationship arguably outweigh the downsides. But with Android and other platforms becoming a bigger proportion of the tablet and mobile market, I wouldn’t be surprised to see more publishers dipping their toes in the open web as a publishing platform, if only to hedge their bets.

Post and thumbnail photos courtesy of Flickr user Wesley Fryer

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The former design director for the New York Times has written a blog post giving his thoughts on magazine apps for the iPad (something he clearly gets asked about a lot). The bottom line? He hates them. With a passion. Why? Because, Khoi Vinh says, they’re “bloated [and] user-unfriendly” and because they are largely a result of a “tired pattern of mass-media brands trying vainly to establish beachheads on new platforms, without really understanding the platforms at all.”

The new app from New Yorker magazine comes in for particular derision from the designer, who says it took too long to download, cost him money even though he already subscribes to the print edition, and was a walled garden without any connection to the web: a point I made in a recent post about the new Esquire magazine app. As Vinh describes it: “I couldn’t email, blog, tweet or quote from the app, to say nothing of linking away to other sources — for magazine apps like these, the world outside is just a rumor to be denied.”

It’s unfortunate that Vinh doesn’t say much about news apps like the one his former employer has for the iPad. The designer says that news-based apps “are really a beast of a different sort, and with their own unique challenges. There is a real use case for news apps (regardless of whether or not any players are executing well in this space).” Magazines, however, are in danger of losing the battle for readers in a digital age by making their apps so closed and monolithic, Vinh argues.

Even with an Apple-operated newsstand, I’m just not sure I believe these people will turn to publishers’ apps to occupy their tablet time. It’s certainly possible that a small number of these apps will succeed, but if publishers continue to pursue the print-centric strategies they’re focused on today, I’m willing to bet that most of them will fail.

Too many publishers, he says, are looking at media consumption in the old-fashioned way (something Om described in a recent post), rather than taking advantage of the more social forms of media available online. This makes virtually no sense at all on a digital tablet that is connected to the web, he says.

In a media world that looks increasingly like the busy downtown heart of a city — with innumerable activities, events and alternative sources of distraction around you — these apps demand that you confine yourself to a remote, suburban cul-de-sac.

Vinh doesn’t just blame publishers though — he blames Adobe as well (which recently took over production of all of Conde Nast’s magazine apps) for “doing a tremendous disservice to the publishing industry by encouraging these ineptly literal translations of print publications into iPad apps.” Who comes in for praise in Vinh’s review? It’s a short list, including one of the few apps to take a creative tack on the iPad magazine: Gourmet Live, which has turned the magazine into an interactive game of sorts. In the long run, says Vinh, traditional magazines will lose out to apps like Flipboard, which are “more of a window to the world at large than a cul-de-sac of denial.”

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Chris Anderson, editor-in-chief of Wired magazine and the author of such books as “Free” and “The Long Tail,” has written a piece for the magazine with the provocative — make that inflammatory — headline: “The Web Is Dead: Long Live the Internet.” His point seems to be that the web as we have come to know it is going away, to be replaced by an ecosystem of discrete applications for specific purposes, many of which are based on proprietary platforms such as the iPhone and the iPad. To which we are tempted to respond: “Hey Chris, welcome to 2010. Nice of you to join us.”

As with some of his other popular writings, Anderson seems to be coming to this realization rather late in the game, and has resorted to a sensationalized headline to grab some attention. We at GigaOM (and plenty of others who cover the web and technology space) have been writing and talking about the rise of the app economy — and particularly the rise of mobile apps thanks to the iPhone, as well as the iPad and Google’s Android platform — for more than two years now. As Om has pointed out on a number of occasions, the success of Apple’s iPhone and application store has accelerated the evolution of the web from a free-for-all to a selection of specific apps for specific needs.

Om’s favorite comparison is to the real world of home appliances: we don’t just have a single all-purpose appliance — instead, we have toasters and coffee-makers and can-openers and other devices that perform specific tasks. So, too, we now have applications for maps, applications for photos, applications for reading books, and apps for video and location-based “check ins” and dozens of other things. That doesn’t mean the web is dead; it means that the web, and the way we use it, is evolving. Instead of wandering around on the web looking for interesting websites by using services such as Yahoo or AOL, we’re using task-specific devices in a sense.

Anderson is right in a technical sense when he says that the web is “just one of many applications that exist on the Internet, which uses the IP and TCP protocols to move packets around.” But he also gets it wrong when he conflates the demise of the web browser with the demise of the web itself. Plenty of applications are using web technologies such as HTTP and REST, just as web browsers do. In a sense, they’re like mini-browsers for discrete applications, and although it’s almost a footnote in the Wired piece, HTML5 has the potential to allow developers to create (as some already have) websites that look and feel and function exactly like apps do. (For more on that, read our recent GigaOM Pro piece on the potential of HTML5.) Where does that fit in the “web is dead” paradigm?

It’s also worth noting (as others have as well) that the chart Wired uses with its story is misleading, or at least the way it’s being portrayed is misleading. (It also has the wrong dates, according to TechCrunch.) It shows the amount of total U.S. Internet traffic that different types of content have accounted for over the last decade (as calculated by Cisco). At the far right-hand side of the graph, video is seen as making up a large proportion of that traffic, while something called “the web” makes up a much smaller proportion than it did in 1995. But this does little to prove Anderson’s thesis, since the bulk of video is still viewed using websites such as YouTube and Hulu — and the fact that we have a lot more video traffic than we used to isn’t exactly a revelation.

The bottom line is that the Wired article simultaneously repeats an obvious point — that we’re using more and more apps instead of pointing a browser at a website — and misses an equally obvious point, which is that this evolution has nothing to do with the web being “dead,” or even sickly. The web is healthier than ever. If nothing else, the dramatic growth of Facebook, which most people interact with through their web browser, should help to cement that idea. We may be using specific apps to access specific web-based services, and we may be making less use of all-in-one browsers like Firefox or Safari, but that has little or nothing to do with the web being dead.

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Adobe may have been stymied at every turn by Apple and its very public hatred of all things Flash, but that hasn’t stopped the company from pushing its vision of interactive publishing for mobile devices like the iPad. Today, Adobe announced a “digital publishing platform” based on its Creative Suites software that it says will allow any magazine publisher to have a snazzy, interactive app just like the one Wired recently introduced (a preview of which is embedded below). But is that really what publishers need as they try to move further into the digital multiplatform world? It’s not clear that it is.

Adobe definitely deserves some credit for finding a way for the Wired app to integrate a lot of cool features without using Flash. Readers can flip through articles with the flick of a finger, scroll through a timeline view of stories, rotate and zoom in on images, and so on. For any publisher whose content involves a lot of imagery — and who wants to appeal to advertisers — these kinds of features are great eye candy. But the big question is whether they’ll convince people to pay for magazine content through an app, rather than just using the web browser on their iPad to consume the same content free of charge. Wired’s app is $4.99, and that’s just for a single issue of the monthly magazine, the same as the print version.

It isn’t just the free vs. paid contrast that publishers have to be concerned about, either. One of the fundamental properties of Flash that many web developers — and web users — instinctively dislike is the fact that it removes much of what makes the web so interactive: namely, the links, the ability to share or remix content, etc. In the same way, Wired’s app seems hermetically sealed off from the rest of the Internet. There are some links (including inside ads) but you can’t share a link to a story through a blog or a social network, and you can’t cut and paste anything.

That may all be great from a publisher’s point of view, since it (theoretically at least) increases the chances that a user will stay with the content and not go elsewhere, and simultaneously decreases the likelihood that a reader will take the content and use it in some unauthorized way. But is it great from a user’s point of view? Because it seems like an attempt to take the kind of control that publishers traditionally had in print and reproduce it in digital form, rather than trying to take advantage of the inherent features of mobile, Internet-enabled publishing.

Not everyone is going to be happy with that trade-off. Union Square Ventures partner Fred Wilson, for example — who recently wrote about his love for the iPad and how his family has adopted it as their new favorite computer — claims he’s come to prefer consuming content through a web browser rather than any of the dedicated publisher apps he has on the device. Among other things, Wilson said this is because:

Many of the apps treat pages as monolithic objects. You can’t cut and paste text, you can’t engage with the content. It is just like reading a magazine or a newspaper. If I wanted to read a magazine or newspaper in physical form, I’d do that.

Which may fit well with Apple’s approach to the iPad platform, which Federated Media CEO John Battelle describes as an AOL-style walled garden. But publishers lusting after their own Wired-style apps had better hope that their readers don’t agree with the Union Square VC’s views, or their apps could wind up being nothing more than snazzy-looking ghost towns.

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The most recent criticisms came a few days ago, at a mobile telecom conference in London, where an economist named Will Page — who works for the MCPS-PRS Alliance, a British copyright licensing-fee collection agency — spoke about research he conducted into music-buying behavior. The results of this research, Page said, didn’t conform to the “power law” distribution described by Anderson’s theory, but instead followed a more common “log normal” distribution (if you really need to find out more about a topic only a statistician could love, you can check here and here).

The bottom line is that Page reportedly argued the data didn’t support the existence of a Long Tail for music buying (a claim that The Register pumped up into a post about how the entire concept is flawed, and how this is “bad news for Californian technology utopians”). Anderson, for his part, says the data appears to have come from research into mobile music-buying patterns — since mobile music provider Mblox was a partner in the study — and that he has already admitted mobile behavior is subject to different effects (music-industry theorist Gerd Leonhard makes some excellent points about other reasons why we shouldn’t necessarily believe the numbers, as does Yankee Group analyst Benoit Felten).

Why does this debate matter? Because Anderson’s theory suggests that content providers should expand their catalogs of music and movies to include more obscure titles, as a way of appealing to consumers with broader, Long-Tail type interests. By extension, the theory also suggests that musicians, writers and directors who are outside the mainstream might be able to pursue their creative dreams and still make a living. If there’s no Long Tail, then all bets could be off, and the Top 40 mentality could once again rule over content-related industries.

There have been previous attempts to bury the Long Tail, including one launched by a former research partner of Anderson’s, Anita Elberse, who wrote a piece for the Harvard Business Review about flaws in the theory based on data she collected. In that case, the former Wired editor made a fairly convincing argument that, far from torpedoing his conclusions, much of the data actually helped enhance the theory. Page’s study may not do that, but it is a long way from a smoking gun.

Contrary to what some might think, Chris Anderson didn’t invent the idea of the “long tail” — similar theories about the effect of diminishing production and distribution costs on digital media were
being discussed at least a decade before he wrote his Wired article, and many of the central concepts have been around since the mid-1940s. Whatever its flaws, it is still a powerful way of expressing the
changes the web has wrought in content-related markets of all kinds. Whether content producers, distributors and creators want to adapt or not is a different question.

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NPR ran a story yesterday on Luis von Ahn, assistant professor of computer science at Carnegie Mellon University and one of the guys who helped develop the CAPTCHA technology. The short version: Efforts to digitize (really) old books and newspapers were being hampered by faded ink that confounded OCR software. The solution von Ahn came up with was to use the words that the software couldn’t recognize and insert them into these so-called reCAPTCHAs and use the power of human brains to decipher them. CAPTCHAs serve up two words, one is the security word, the other goes toward the book digitization effort. It sounded interesting, so I called von Ahn to find out more.

Here’s how it works. The New York Times is working to digitize all of its issues starting way back in 1851. It starts by scanning every single page as an image. That’s where reCAPTCHA comes in. It runs two optical character recognition (OCR) programs to turn all of those images of pages into text. Different OCR programs tend to make different mistakes. When the two programs disagree on a word, that word is plucked out and distributed among CAPTCHA security programs spread out across 45,000 web sites like Craigslist and TicketMaster.

Human beings then look at the words as part of the CAPTCHA security measure and do the deciphering by retyping what they think the mangled word is. Depending on the word, as little as two or three people agreeing on what it is is enough to figure it out. The word is then sent back to the New York Times to be reinserted into the text version of the image.

Initially, this project was part of Carnegie Mellon, but von Ahn said that they are spinning out reCAPTCHA as its own company. While The New York Times is paying to use the service, reCAPTCHA is also doing work free of charge for the Internet Archive’s project to digitize every book published before 1980.

But von Ahn is looking beyond just re-typing words as security measures. He says that his team has tried using images and having people type what they see. The problem, von Ahn says, is that people don’t spell very well, so even though the image is of a “cat” people could spell “kat” and not answer the question correctly. ReCAPTCHA is also expanding into audio, and using the audio version of CAPTCHAs to have people listen to and decipher words from garbled old recordings or closed captioning transcriptions.

The idea of taking a necessary evil like spam prevention and turning it into something useful is a good one. Who knew selling my old digital camera on Craigslist was actually an act of historical preservation?

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‘Long Tail-Schmong Tail, Chris Anderson’s-free-will-be-the-death-of-me.’ Or some such, griped founder Hank Williams over at Silicon Alley Insider yesterday in “Free” is Killing Us–Blame The VCs”:

Venture capital has totally distorted the market. VCs are investing billions of dollars in companies with instructions to get big fast and to worry about advertising revenue later. As a result the competition is for users and not for paying customers. Unfortunately, to fix this, many more companies need to die.

Put Hank’s way, I wanna party like it’s 1999 all over again. So this prompts our

Question(s) of the Day:

* Is it good or bad that the bucks are going right out of Busine$$?

* Is it the VCs fault?

* Should ‘free’ be the future?

* Or, is Hank’s scenario better?: “With less “free” floating around, a more regular supply and demand dynamic can take hold, [and] customers will have to pay for the things that are important to them and non-quantized growth dynamics can return.”

AND * Did you get into this startup business to make money selling your product/service, or would you be content to merely make it by selling your (VC-funded, eyeball-oriented free-product hawking) company?

Tell us what you think.

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In a conference call to demo the Express software (which is really sweet vs. what’s on offer from the photo-editing software that comes with a digital camera, Picasa, or even displaying photos via Flickr) Doug Mack, VP of consumer and hosted solutions, said Adobe had built out a hosting infrastructure to support Express starting a year ago. He declined to go into the costs of the system, but said Adobe would be offering even more hosted applications in the future.

So I called Adobe for more information. Spokesman Geoff Baum declined to offer me much additional detail. He did, however, say the web-hosting infrastructure was entirely separate from Adobe’s internal IT, and that it was built to be reliable and to scale for many users.

Photoshop Express will be the first big test of the hosting platform, but in the next six to 12 months “more premium services within the same Photoshop.com web environment” will also be hosted. I’m guessing that in addition to paying for more storage, the flagship Photoshop program and Photoshop Elements might also find themselves with online services.

Since building out a solid hosting platform isn’t cheap, Adobe has plans to make it pay beyond just charging a bit more for online storage. Baum said Adobe will make the investment pay through upselling services, potential advertising, and OEM deals with other companies, such as one in which a company licenses a component of the Photoshop Express software.

The services hosted on the newly built infrastructure may not be making money today, but it’s clear Adobe has gotten the web services religion and plans to integrate those services into its popular software packages. “This is an important direction for the company and something we wanted to control and scale as necessary,” Baum said. “[Not outsourcing] it is mainly an indication that hosted services are important to what we’re doing.”

It’s an ethos that I hope will play out across Adobe’s other software programs, especially given the potential for competition from companies such as iScribd. When Adobe launched its hybrid rich Internet application development platform AIR, CTO Kevin Lynch told Wired:

“The other effect is hosted services. Software is moving from being packaged, where you develop for a particular operating system and put it in a box, to being developed and distributed over the internet and being designed to run across operating systems. That’s where all the innovation has moved to. Software isn’t as OS-specific anymore, it’s moving to rich Internet applications. It’s a sea change in how software in general is being built.”

Adobe is clearly preparing for that sea change within its own product portfolio.

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Offer products for free and extract data from its use to sell

The best example I think is Newsgator. Newsgator offers several RSS readers and services (Newsgator, NetNewsWire, FeedDemon) and used to charge for them – they had actual revenue by charging for their products! Recently however, Newsgator decided to offer all readers for free. That way they gather a lot more data, which they will aggregate and offer as ‘attiontion data’ to publishers, journalists and other people interested in buzz. A risky way of transforming a business, but also one that could inspire a lot of other start-ups to rethink their sources of income.

If you want to learn more about this concept you should head over to the podcast section of Educators Corner by the Stanford Technology Ventures Program, where Mitch Kapor talks about his new start-up Foxmarks. Foxmarks enables users to synchronise different lists of bookmarks for free and plans to develop business cases on top of the many millions of bookmarks they aggregate through their product.

Offer the main product for free, charge for complementary products

This is the main thinking behind some of the recent acquisitions of open source products like MySQL. When you offer a product for free (MySQL), if you’re lucky, you’ll see a growing demand in your complementary products (like the servers that SUN offers).

Google is another great example: they need more pages to plave relevant ads on, so news, e-mail, search results, book pages, product search are great ways to serve more pages to more people and thus having more space to put ads on. For an excellent article on this, head over to Strategy+Business for The Google Enigma by Nicholas G. Carr.

Free for consumers, businesses will be charged

Your free product might enjoy great user numbers and then one day a company comes by with more sophisticated needs. Great! You’ve developed a product with value to users, and with value to companies. This means you have found a means to grow revenue without the need of plastering your free product with ads. So based on what do you charge businesses? You’ll notice businesses will have other needs. They might require more security, a more robust backup or options to export their data. Or they might want your product to be implemented in existing systems, or need other customizations. Offer some options for free to get the companies coming, charge for other options to make a business, and you have a great way of generating and growing revenue.

Of course the line between consumers and businesses won’t always be exactly clear. My advice: when in doubt treat them as consumers. Don’t charge unless you’re sure they’re representing a company by expressing additional needs, otherwise keep your product free for them.

Single users for free, multi users will be charged

It looks a lot like the business edition, but that one can be expanded to multi user accounts in general. Only this time, don’t focus on business needs but on multi user needs. When you have a product which provides value to single users but has more value when used by more users within one account, you might consider charging for the options that enable your product to go multi user.

One quick word of advice: be careful with this option. If you decide to offer the multi user options only when your customers pay for them, you might be cutting away one or several potential ways of your product to ‘go viral’. You should be aware that offering multi user options that make your product more valuable for every single user could mean you might have a potential great way to grow your user base at your hands. If these options happen to have a viral effect and might be able to drive more users to your product, you should think twice before locking them up in an account that you charge for.

Charge for one product, develop others for PR value

This one requires that you already have a product that people want to pay for or that you have other ways of extracting value out of it. Since you’re already making money, all you need to do is reach out to more potential users. Of course you can pour money into some Adwords/Adsense, but it might be worthwhile to think of a more sustainable and creative way to make your business known. One way is to come up with new services.

If offered for free they might attract an interesting new base of users and enhance your reputation. A great example are the platforms that companies like Facebook and Salesforce offer to other developers. These examples also serve other purposes since they’re closely tied to the main products of these companies, but they’re also great ways to drive more people to their respective main products.

Another example are companies offering consumer sites as a showcase of their technology. The source of revenue will be implementing the same technology within companies or within other web projects, so their own site is a creative way to connect with potential customers.

One piece of advice when developing your business model

Especially when you target consumers, never ever charge for something that enhances the main experience of your product! I meet many start-ups that want to offer for instance a platform to put information on (i.e. reviews, listings) but want to charge for uploading pictures, video, the option to insert a longer version of their story, widgets of their own information etc. That’s almost always wrong: what you’re doing is crippling the experience and telling them not to go all the way in using your product. Figure out another way to generate revenue, but don’t limit the potential great experience your users can have when using your product.

Jeroen Bakker is cofounder and CEO of the web development and e-learning company, Paragin. He’s also a cofounder of Infovester, which aims to help professionals cope with information overload by harvesting, indexing and filtering the information they need in their daily job. He has written for The Next Web, a blog and a conference put together by Web2.0 entrepreneurs in Europe. He’s also involved with Remindo.

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Blurb, which was founded in 2004, launched its site in April of 2006 and is on track to turn in breakeven results this year, is both a digital bookmaker and an example of yesteryear’s big Internet trend: The Long Tail (It seems so long ago, but it was only three-and-half years ago that Anderson wrote about the idea in Wired). Since we move at digital speed, we’ve already discarded that trend (and possibly refuted it) for social everything. But true business growth doesn’t take place at that harried clip, it typically requires the five to seven years allotted by VCs for their investment time frames.

00
Those time frames are there for a reason. Blurb CEO Eileen Gittins Blurb says the company exceeded its revenue expectations by 40 percent last year. (In 2007 she told Time she anticipated sales between $5 million and $10 million for the year.) And in the quarter following its launch late last year in Europe, sales from the continent have climbed to account for 17 percent of total overall revenues from a mere 2.5 percent.

To me this is a nice reminder to avoid focusing solely on the trend du jour, but also to keep in mind that much of the world runs at business speed, and that it’s the people out in the rest of the world that break a technology site into the mainstream.

Blurb makes books, nothing terribly technical about it, until you think about how impossible it would be, before the Internet existed, to source, edit, design and print 90,000 different titles in a single year. Its biggest customers are corporations trying to create memorable advertorials, though artists and average Americans also pull together their own works of art. Blurb competes with other online publishers LuLu and Xlibris, but has the lead in high-end photobooks.

The cool thing about marrying the digital medium with one that began in 1040 with the first Chinese printing presses (sorry Gutenberg), is that when it comes to user-generated content, Blurb may end up making UGC profitable before YouTube does. Profitability isn’t everything and I’m not sure how Blurb could ever reach more people than YouTube, but it’s nice to talk to an online service that can make money in the here and now.

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1a) Also see this Ostatic post that asks, Recession: A Boon for Open Source?

2) Business Models & Economics : We’ve written about the power of running your business on “mostly free apps”. Now read this month’s WIRED cover story, Free! Why $0.00 Is the Future of Business, by editor Chris Anderson. See also TechDirtDaily’s worthwhile essay on why the nay sayers are just whining: Saying You Can’t Compete With Free Is Saying You Can’t Compete Period

3) Funding & When to Sell?: This is evergreen question was addressed by VC blogger Fred Wilson after rumors that Digg is looking for an exit now, not later. If you don’t want to run your business for 7-10 years, Wilson writes, then “sell when the buyers are knocking down the door.” He also invokes a long-held stockbrokers’ rule of thumb: that money is made on ‘the buy,’ not ‘the sell.’ (PS: He thinks Rose should sell.)

4) Strategy & Innovation: Web3.0 newbies will get a great crash course by scrolling through this 14-slide presentation on What’s Next on the Web? Web Technology Trends for 2008 and Beyond by ReadWriteWeb Editor Richard MacManus, given at the Media08 event in Sydney. Make sure you click an extra time on slide #14, for more RWW resources, including additional slideshows on, 2008 Tech Trends & Predictions, and Web2.0 Business Models.

5) Creativity and Idea Management: This post from Life Optimizer is called How to Find Good Ideas for Business & Life.” Best tip is #2: “Bring a capture tool wherever you go…” See also: 4 Simple Ways to Never Lose Your Ideas.

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1) Leverage the power of free.
Free stuff drives behavior but be to sure to use a second stage premium. For example, the first premium you can use to drive registration. The second stage premium (SSP) would be a reward for bumping incremental revenue. See also, Chris Anderson’s latest opus in WIRED magazine: Free! Why $0.00 Is the Future of Business.


2) Turn up low-cost marketing. A great idea is to present at industry get-togethers. Stirr.net here in Palo Alto, California hosts regular events that allow start-ups to showcase. In some cases, such as Crowd Factory run by Alex Mouldavan, you get supplemental media coverage via TV news.

3) Don’t cry for me Argentina. Don’t tear-up for the U.S. economy just because it has back-to-back bad quarters. Consider this: the U.S. gross domestic product (GDP) undermeasures the services component of the U.S. economy (the most relevant component to the tech industry) and hasn’t been updated by the GAO in 40 years. Quiz: how great a contraction is required, over two consecutive quarters, to call it a recession?: 0.8%; 5%; 12%; or 22%? Right you are if you guessed 0.8%! I think I lost 0.8% in productivity when my dog Baxter demands two walks.

4) Sell to save your client money. You have to realize that selling
is a contact sport, and as a startup you probably don’t have existing business. This means to get it, you’re going to have to win it away from the client’s current vendor. This is easy, especially in a down economy, if your sales effort is focused on saving the client money.

Pay special attention to the following 5 Things that Put A Client Account in Play — these are universal, but occur more frequently in a down economy and that means more opportunity for you:

(a) change in control at the client level (a change in ownership of the client’s business; a big stock hit; etc.)
(b) change in current vendor performance
(c) loss of favor in vendor
(d) change in purchasing manager/decision maker
(e) change in cost/value to client
Source: UCMS

5) Stop minimizing expenses. You’ve minimized long enough. OK, reward staff for money saving ideas that simultaneously grow. For example guerilla ad techniques that translate into registered users executed by your sales team should be rewarded.

6) Carrot & Stick Gambit. Give your clients a rebate, something they’ll like in a recession. That’s the carrot. The stick: require them to pay half of the discounted-fee upfront. For example, the customer acquisition cost to a credit card issuer (a bank) is about $45. So, when I first started UCMS, I charged $22 — a rebate the banks liked. It worked for me because I required First Chicago Gary Wheaton Bank to pay me $11 of that discounted acquisition cost up front. This is what I call Recession Financing.

Two other forms of domestic-Recession Financing are demonstrated best by Stanford GSB-alum, Andy Laats (I met him recently at a conference): a) borrow against accounts receivable; b) borrow against an international letter of credit. Andy later sold his business, Nixon Branded Watches to Billabong.

7) Build during a bust. Sell during a boom. Worse is to build during a boom and sell during a bust.

An equally important concept is what I call “Treasure Management for Founders.” This will be the subject of my next post.

Larry Chiang is the founder of duck9, which educates student borrowers on how to establish and maintain a FICO score over 750. He is a frequent contributor to Found|READ. His earlier posts include: 9 Techniques For Closing a Deal via Voicemail, How to Work The Room; 8 Tips On How to Get Mentored ; and 9 VCs You’re Gonna Want To Avoid, and 9 Things Stanford B-School Won’t Teach You.

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Chris’s point, this time, is that there are now many revenue models for you to consider besides old-school banner ads.

“Think of all the various ways that an audience that is paying attention to your service can be paid for by companies and people who want some of that attention,” he writes, quoting the prolific VC-blogger, Fred Wilson.

Then Anderson lists several of these monetization alternatives. We encourage you to review them — there are lots of opportunities here for enhancing your “operational flexibility” as you prepare your startup for the economy’s downturn.

Think: affiliate revenues (Amazon Associates); of renting your subscriber list; of licensing your brand; even, of so-called “alternate outputs,” like print-on-demand PDFs and web books. And then there is Found|READ’s choice:

Getting the users to create something of value for free and applying any of the above to monetize it. (Like Digg or our own Reddit.)

Then today Wilson chimed in with his own post extending Anderson’s list. Fred’s b-models include “cost-per-install” (think Facebook apps) and API fees, where 3rd parties are charged to access your API.

Together with the reader comments, the two lists make for a very nice crib sheet. Anderson’s is here Wilson’s is here.

Do you have a monetization model to share? Both lists stand open, so chime in!

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