web2.0 and the cost of production

This post is a follow-up to my recent web2.0 monetization post.

In order to make money in the web 2.0 world, you need to reduce the cost of product to almost zero. That’s because the means of web monetization are almost all very marginal.

(See my list in linked post above if you don’t agree. If you don’t – great! Share your secret.)

So how do you reduce your cost of product to almost zero? There are three ways I can think of:

  1. Outsource
    Get your infrastructure built cheaply, at least when starting up. India, China, Eastern Europe, developing Asia, whatever. Get it built cheap.

  2. Crowdsource
    Build something that increases in value as people use it and share it. (And, as should be obvious) build something that has enough value that people will use it even before other people have started using it.) Note that when I use the term crowdsource, I don’t mean use people to build your empire. I mean providing something with enough built-in utility that people will freely decide to use your services because your services meet a need they have.

  3. Automate
    Google has two huge assets: a great search platform and a great advertising platform. Both are almost completely automated … they run by themselves. Build something that runs by itself – the fabled perpetual motion machine – and find a way to make penny every cycle, and you’ve just built yourself a wealth engine. (Of course, it’s the almost completely part that some people forget.)
[tags] web2.0, monetization, startup, production, costs, entrepreneur, john koetsier [/tags]