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Web 2.0: How to Get What You Don’t Pay For

Don’t put your Web biz permanently in the red with pricey “solutions.”



Stephen M. Saunders By Stephen M. Saunders
01/29/2010

Let me take you on a journey back in time… It's the late 1990s. I’m sporting my best mullet and stone-washed jeans and working at a b-to-b technology magazine, which has just launched a “Web site” on this thing called an “Internet.” The publication is run by forward-thinking suits, who decide in their ultimate wisdom to add bulletin boards to their shiny new online property, where folks can exchange pleasantries “in cyberspace.” So they commission a company to build and add the bulletin boards to the site at huge expense.

Almost no one uses the message boards, but more importantly, one of the more geeky employees points out shortly thereafter that a better bulletin board is available as Linux software, at a cost of no dollars (and two years after that, the magazine is shut down… coincidence?).

Of course, no-one in b-to-b publishing could make such a dumbass mistake today, right? Wrong. Every day in every part of our industry b-to-b publishers throw good money away signing long-term contracts that lock them into overpaying for technology that is available to the canny shopper either free, or for pennies on the dollar. Worse still, many of these contracts lock them into proprietary services, which make it difficult and hugely expensive to switch providers.

Deals A’ Plenty

But don’t take my word for it; let’s look at some real-world examples. A former colleague of mine, R. Scott Raynovich, is currently starting a Web business, raynoreport.com, comprising ad-supported blogs and paid research. The site will feature message boards, e-commerce, and a bunch of other Web 2.0 mumbo jumbo. The cost to launch this business? $600 for two years of hosting on godaddy.com, plus $2,000 in programming development work. This is a good deal—working out to just $3.56 a day. (How does that compare to the cost of running your Web 2.0 enabled e-commerce friendly site, hmmmm?)

I recently negotiated a deal with a paid search company for a large publisher. After the usual va-et-vient we agreed on a price of 5 cents per click-through with the provider. It subsequently transpired that a different part of the same publisher was paying 80 cents per click-through for the same service. Oops!

There are three reasons why there are deals a’plenty to be had at the moment. First, the recession. Second, VCs with deep pockets and shallow IQs are funding many of the Web startups and are prepared to paper over losses in the hope that their investment will be the last man standing. Third, Google has more money than sense. Recent analysis by Internet Evolution, a Web site I founded, indicates Google is losing about $1.6 million a day on YouTube. And at Internet Evolution we’re taking advantage of Google’s largesse by using YouTube to enable video messaging on our site—for free. There’s no reason why other b-to-b publishers shouldn’t do the same.

How To Keep From Getting Burned

Traditionally the argument for going with a more expensive service is that you get what you pay for. This is often not true. Take customer service—in my experience I’ve found that it tends to dissolve faster than an Alka-Seltzer once you ink a contract with any Web service provider.

Talking of contracts, here’s another word of advice: NEVER sign a contract of more than one year with any provider of any Internet service. Things like Web hosting, e-commerce, and content management are infrastructure, and the rule of thumb is that all Internet infrastructure is getting cheaper over time. Locking in a price today makes no sense.

Before signing with any service provider find out how easy it will be to extricate yourself should things go pear-shaped. Hosting companies and content management companies add a bunch of proprietary “stuff” on the backend, which makes it incredibly difficult and time consuming to extract your data should you have a falling out with them. This explains why the average cost of switching content management systems is $250,000, or enough to keep raynoreport.com going for 187 years.

For b-to-b publishers the game today isn’t “The Price is Right,” or even “Let’s Make a Deal.” In a world where Google has virtually limitless money and VCs have an inexhaustible supply of stupid, publishers with money to spend on Web services hold all of the power. Half price? How about “no price”—at least for the first six months. Baker’s dozen? Make that a two-for-one and you’ll think about it.


Steve Saunders is an independent media consultant and the founder
of Internet Evolution.

Stephen M. Saunders By Stephen M. Saunders
01/29/2010







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