Web 22 - Where Everybody Has A Share

There is a trend among analysts, consultants and commentators to advise Web 2.0 Startups in Wonderland to focus on attracting Tribble Traffic and worry about monitizing it later. Whatever you offer on your site, they say, make lots of people want to use it frequently, preferably for free. "Don’t worry, be happy" goes the refrain, "a business model is sure to emerge sooner or later."

It is time to get beyond the limitations of "free." Here in Silicon Valley, we know how to motivate lots of people to work their butts off for virtual money. We were just warming up during the Web 1.0 days by letting stock option flow like water so that nearly everyone in the Valley was a paper millionaire at one point or another. In the next web era, which I call Web 22, we will pay people to visit web sites, pay them more to click on ads, and pay more again if they then actually buy something.

Venture capital will be used by Web 22 startups to fund the visitor payments. The VCs will raise their funds from the companies that might become advertisers. Advertisers will pay the web sites for the clicks, who will share that revenue with the clickers. Advertisers will also offer rebates to clickers who actually make purchases. This will all work because everyone involved in the process will have a share!

This business model was actually perfected in World War II and documented by Joseph Heller in Catch-22. Milo Minderbinder, whose Nobel Prize in Economics is long overdue, is the genius behind this business model. This is how he explains it to Yossarian, who is puzzled about why Milo buys eggs in Malta for seven cents and sells them to the mess hall for five cents:

"I do it to make a profit."

"But how can you make a profit? You lose two cents an egg."

"But I make a profit of three and a quarter cents an egg by selling them at four and a quarter cents an egg to the people in Malta I buy them from for seven cents an egg. Of course, I don't make the profit. The syndicate makes the profit. And everybody has a share."

Yossarian felt he was beginning to understand. "And the people you sell the eggs to at four and a quarter cents a piece make a profit of two and three quarter cents a piece when they sell them back to you at seven cents a piece. Is that right? Why don't you sell the eggs directly to you and eliminate the people you buy them from?"

"Because I am the people I buy them from," Milo explained. "I make a profit of three and a quarter cents a piece when I sell them to me and a profit of two and three quarter cents apiece when I buy them back from me. That's a total profit of six cents an egg. I lose only two cents an egg when I sell them to the mess halls at five cents apiece, and that's how I can make a profit buying eggs for seven cents apiece and selling them for five cents apiece. I pay only one cent a piece at the hen when I buy them in Sicily."

"In Malta," Yossarian corrected. "You buy your eggs in Malta, not Sicily."

Milo chortled proudly. "I don't buy eggs from Malta," he confessed... "I buy them in Sicily at one cent apiece and transfer them to Malta secretly at four and a half cents apiece in order to get the price of eggs up to seven cents when people come to Malta looking for them."

In Web 22, no one will get any real money, which will be derisively referred to as "old money." All payments will be made to a virtual account. The unit of currency will be the milo. Milos will be usable in any part of the Web 22 economy.

Where everybody has a share.

Copyright © 2006 Philip Bookman

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