BEIJING, March 5 /Xinhua-PRNewswire/ -- CCID Consulting, through their flagship branch, Internet Industry Research Center, reviews China's Web2.0 industry in 2006, and looks at the possible developments that will be seen in 2007:
In 2006, the US Web2.0 market was undoubtedly a dream for numerous Web2.0 entrepreneurs in China: Youtube, founded barely one year earlier, was acquired by Google at an astronomical figure of $1.65 billion; Wikipedia, written by netizens themselves, became one of the top 10 most visited websites in the world; and in the United States, Myspace overtook Yahoo! for the first time in terms of access volume. 2006 also saw Time magazine award its "Person of the Year" to "YOU" who were expressing themselves on the Internet. Web2.0 has changed the life of Internet users in the United States, and it is also a revolution to the US business community.
Compared with the United States, there were great fluctuations in the development of Web2.0 in China in 2006. Early in the year, Web2.0 continued its development momentum on of 2005. In an image of a revolutionary, it brought the revolutionary sparks of the Six Degrees of Separation, decentralization and the Long Tail theory to the Internet in China. The sparks of Web2.0 soon turned into a big flame in China's Internet market. Web2.0 application fields such as blog, podcast, SNS and Wiki became the fashion items of the Internet world in China. Witkey, a Web2.0 application with local features, came to Beijing, and in the first half of 2006 the Web2.0 concept won plaudits from numerous people. This not only promoted a new peak of Internet business development but also attracted large amounts of investment. Everyone seemed to be busy embracing themselves, seizing this opportunity to make a difference. Billions of US dollars were poured into China's Web2.0 market and the second wave of the Internet came into shape.
However, lacking profit models, Web2.0 was too weak to withstand even the first blow. In the second half of 2006, Web2.0 was under growing suspicions. A series of bad news came: venture capitalists turned elsewhere, business founders resigned, and new websites made staff cuts or went bankrupt. The miserable fate of Web2.0 in China seemed evident.
Despite booming in the United States, Web2.0 failed to acclimatize in China, and many people have ascribed it to the Internet growth environment in China. Indeed, there is a rather big gap in the Internet growth environment between China and the United States. However, this is not the only cause for Web2.0's poor performance in China. They have ignored some pitfalls of Web2.0 itself. These pitfalls are fatal to Web2.0 businesses in China.
First, it is the content acquisition path of "Users create contents", which can greatly reduce websites' content acquisition cost and enrich their contents. In actual operations, the contents created by users vary greatly. This affects websites' brand image. Advertisers therefore adopt a wait-and-see attitude, while the government administrative department has particular concerns. On one hand, it blocks the source of revenues. On the other hand, it increases policy risks. Once the government adopts a content examination system, websites' operating cost will rise drastically. Second, it is the "Word-of-mouth Communication" promotion model. Web2.0 websites in China have directly copied the operational model in the United States, and because Web2.0 websites' technology thresholds are rather low, competition in the same market segment is intense. To get good market performances and win the interests of venture capitalists, various websites have conceived all kinds of market promotion means, meaning their marketing costs have remained high. Finally, the low-cost operation of such websites has become more and more difficult. After their management and marketing costs have risen drastically, websites cannot naturally achieve low cost operations. The "pitfalls" which these Web2.0 websites worship as credo have led to the bankruptcy of a large numbers of Web2.0 websites in China.
Though Web2.0's such switchback performance in 2006 makes it impossible for people to clearly see its development directions in the near future, Web2.0 has nevertheless changed the life of Chinese netizens. It is also now changing Internet applications in enterprises. Web2.0 applications as represented by blog, podcast, RSS and SNS now occupy an important position in netizens' daily Internet applications, and have changed their Internet usage habits. Blog marketing, community marketing and interactive advertising have become new means of market promotion for enterprises. Web2.0 is now a leading marketing tool for enterprises.
CCID therefore has such reasons to believe that Web2.0 will develop further in 2007:
-- Seeking differentiation from interactions is a development trend of
netizens' use of WEB2.0 services;
-- Users' self-created contents are now integrated with professional
contents. Traditional media have further embraced the idea and
operational models of Web2.0. More superior quality contents have
provided a good foundation for efforts to explore new business models
for Web2.0 websites;
-- Services that integrate and package users' self-created contents will
emerge on a large scale. Web2.0 websites will become the best venue
for tapping entertainment and creative talents;
-- Web2.0 websites' internal ecological chain will become more
complicated.
The emergence of a new value chain will give rise to new business
models;
-- Enterprise-level Web2.0 applications will become richer. Online
interactive marketing through Web2.0 applications has become an
important marketing means for enterprises; and
-- To lower content examination cost, information-filtering systems have
become an essential function of Web2.0 websites in China. Information
filtering technology will also develop fast.
For more information, please contact:
Cynthia
Coordinating Manager
Tel: +86-10-88559080
Email: liuyan@ccidcosutling.com
