“Web 2.0” is defined as a set of applications, technologies and user roles. The applications include blogs, wikis, social tagging, social gaming etc., even though it may not always be fully clear whether a specific application is Web 2.0 or not. These applications are based on creative combinations of a number of recent web-related technologies, including AJAX, syndication feeds, mash-ups, and wiki engines. Perhaps the most pertinent characteristic of Web 2.0, as compared to the previous “version” of the Web, is that it enables users to do more than just retrieve information. Although the possibility to do so is not entirely exclusive to Web 2.0, the extent and ease with which it can be done now is new: the user can become, with little effort, an integral part and co-provider of most or all of the elements of a service delivered through the Web, and be a content provider, quality manager, technology tester, and contributor to collective intelligence.
The available figures about recent Web 2.0 diffusion deliver two messages. Firstly, its spread is extremely rapid by any standards, although not uniform for all its applications. The most diffused applications, including wikis, blogs and online social networks have, in only a few years, been adopted by some 20-40% of Internet users. Secondly, the intensity with which users participate differs a lot. It can be estimated that about 3% of European Internet users generate content based on their own creative efforts, about 10% of them provide feedback, comment and review existing content, and 40% are passive consumers of Web 2.0.
The rapid diffusion of Web 2.0 has been enabled by several factors. First, Web 2.0 builds on a number of technological innovations and improvements, which enable users to easily create and distribute content and to interact with other users. At the same time, general price reductions and performance improvement in network and terminal equipment, combined with improved broadband availability, have been crucial for the take-up of Web 2.0 applications. In addition, the rise of the Internet version Web 1.0 had already created a generation of young people who have little reluctance to share personal data online. The influence of the open source community has also been important, partly because of the technologies that have been developed, and also because it has set the stage for collaborative communities.
Although value chains are not yet settled and differ from application to application, a few key features are more or less common to all of them. At the centre are the providers of Web 2.0 applications who may be pure Web 2.0 players (e.g. Wikipedia) or traditional players from related industries such as the media and Web 1.0 industry (e.g. Disney or Yahoo). They provide opportunities for users (individuals, companies and other organizations) to network and/or to create content. Many value chains also include advertisers and companies providing advertising platforms. Technological platforms for the applications are made available by providers of ICT services and Web 2.0 software packages, and by ICT goods suppliers who are selling hardware with new functionality and interoperability for users to create and access content.
As yet, no dominant revenue model for Web 2.0 content-hosting sites has been established. Four basic revenue models have been identified: (1) advertising (e.g. YouTube); (2) users paying for content (e.g. online social gaming); (3) bundling and other ways of tying Web 2.0 to complementary products or services (e.g. Big Brother); (4) donations (e.g. Wikimedia projects) and (5) the interim business model where developers of a new Web 2.0 content hosting site set out to sell it to a large established company. The content hosting platforms may in turn choose to remunerate content creators through different revenue-sharing schemes, or simply rely on their voluntary contributions.
Europe’s current position in the supply and development of Web 2.0 applications is rather weak. Although Web 2.0 is used almost as much in Europe as it is in Asia and the US, Web 2.0 applications are largely provided by US companies, while Europe and all other regions are left behind. About two thirds of the major Web 2.0 applications are provided by US companies, with similar shares for revenues, employees, and even higher shares for innovation indicators such as patents, venture capital and R&D expenditures. The corresponding shares for the EU hover around 10%. Hence, as it starts from a rather weak position, Europe may in fact lose ground in the medium-term.
Nevertheless, Europe could have the advantage in some areas of the Web 2.0 landscape, for example social gaming, social networking, and Mobile 2.0. European industry appears to be more competitive in online social gaming, and in the computer gaming industry as a whole, than in other parts of Web 2.0. European firms could also become competitive in online social networking, where there seem to be niche markets for locally-adapted or otherwise differentiated social networks. Finally, the EU has a very strong presence among mobile communications operators and suppliers and is therefore in a good position to establish leadership in Mobile 2.0.
© European Communities, 2009