USA Today joins the latest to drink the widget koolaid:
Max Levchin, CEO of Slide, the largest widget maker, with 134 million monthly viewers across the major social networks, likens the entrepreneurial climate among widget makers to the early 1980s, when software companies such as Adobe Systems developed applications for PCs. “It’s a really exciting time for software development,” says Levchin, who also co-founded online-payment processor PayPal.
There is a lot of value in creating products or services that resonate on social networks, that’s for sure. But, let’s be somewhat candid here, we’ve basically diluted the definition of a web application to include anything and everything to get investors excited.
Levchin, for example, is a brilliant bloke, but comparing Slide to Adobe is pushing it, to put it mildly.
I think the greater issue is “you better have a strategy in place for social networks, because clearly that’s where audiences are going.” Whether or not widgets remain the holy grail is another question.
The Web has definitely been turned inside out, look at AOL.com, who last year was discontent to be a walled garden, opting for a free portal, then one short year later imploded the portal strategy to become a network, too.
We ourselves at WatchMojo.com are no different: we continue to develop our property as a storefront but the lion’s share of our growth comes from our network, too. Just this week, I explained how we were building the most valuable apps on the most valuable social networks.
That’s some heady growth, we’d never be able to match the size and reach of our network on our property… but giving up the property altogether makes it hard to really showcase your value, since a property is a storefront required to sell your wares, no?
Either way, the notion that widget makers are the next hot IPO is sheer folly:
“The possibility of going public has never been better for us,” says Jia Shen, chief technology officer and co-founder of RockYou, makers of a widget that turns anyone’s photos into slide shows. The 2-year-old company boasts 40 million monthly viewers across the major social networks.
Sure, while you’re at it, let me show you a bridge, too. This does not mean that they’re not valuable, but caution is required when evaluating the value thereof. Just this week, a popular, money generating app was sold for $21,500… not exactly IPO pricing.
Although Facebook members generally eschew banner ads, they are more receptive to widget ads, according to a study in July by market researcher Grunwald Associates.
“If 2007 was the year for widgets, then 2008 will be the year advertisers reallocate their budgets to take advantage,” says Martin Green, vice president of business for Meebo, an instantmessaging company that creates widgets.
I don’t doubt Green would say that, he’s biased. It’s like me saying video will take over the Web, then the world. Of course, are people biased because of the business they’re in, or are they believers in a business and then enter a business, displaying a bias afterwards. I don’t doubt widgets will be relevant in the social networking landscape, but only because social networks themselves are hard to monetize. But, even then, let’s face it: social networking ads will remain paltry next to total online ads, which will be a $30B+ market by 2008:
Ads on social networks are expected to haul in $1.2 billion worldwide this year and $1.9 billion in 2008, says researcher eMarketer.
I don’t know. I personally see the need to have a network as a very important facet of a company’s growth plan, but to get all jazzed up around widgets seems rather faddish.
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