How to Make Money on the Internet v2.0
Tuesday, February 13, 2001 by Dave Winer.
Version 1.0 
A little over a year ago, before the dotcom bust, I wrote a piece entitled How To Make Money On The Internet. It was a rambler, written for the publishers I met at the World Economic Forum annual meeting at Davos, Switzerland.
It made sense for the times, but things have changed. To make money on the Internet, get a lot of people writing for your site, nurture them, teach them, find the best, and grow grow grow. Editorial people become talent scouts. Instead of employing writers, employ facilitators and teachers. Rewrite the rules of journalism to reach into the depths of our culture, in ways that print-based media can't. There's no limit to the coverage of the Web. Where the front page of a newspaper is finite, on the Web we have vertical scrollbars that can go (virtually) to infinity. If another good story comes along, point to it. It's pretty simple.
Perhaps it's not surprising that version 2.0 is a superset of 1.0, it's just an upgrade. The same advice applies, but now that the dust has cleared from the dotcom exuberance, the next steps are even more clear.
Print in retreat?
In the course of doing my job I come in contact with a fair number of print journalists and their publishers. Now that the dotcommers are in retreat, you'd think the ones with solid print-based business models would be rushing to fill the new vacuum, but they're not. Most of them are not sure why they're on the Web, and many are pulling back. That's OK with me, because I have the business model figured out, and if they pull back, then there's nothing in my way. (They could be serious competition, but that's OK too.)
Writing for the Internet
In 1994 I started writing for the Internet. I wrote for free. Some people thought that at some point I'd charge for my writing, but I told them I wouldn't. Almost seven years later I'm still not charging. Why? Because I want people to read what I write, even people without a lot of money. I want to influence their thinking, I know I can't implement all my ideas, but I still want to see them happen. So I write publicly without any barriers. Anyone with a Web browser or email client can read what I write.
It worked. I learn so much this way. People explain things to me I'd never understand without patient and repeated drill. And I feed back what I learn. The result is my professional career has blossomed. I have the influence I sought, with nothing more than my mind, a keyboard and a few servers. While the dotcoms burned through billions, we arrived a *bigger* place spending much less money. Think about that, and the power of money, and how much more leverage you get with the Web. It really worked. Sometimes it's good to just reflect on that.
We're now hosting approximately 20,000 sites like mine. No one is paid to write. They do it for their own reasons, mostly (I think) for the same reasons I do, to study, learn and teach. And many of them have something interesting to say, some subject that they know a lot about. The quality keeps going up as new people join, and as people learn how this medium works and get new skills. Lately we've had a group of professional writers come on board, it's so welcome.
Then groups and associations form. People discover and read others with similar interests, point to them, comment on their ideas, refine and develop their own thinking. Round and round, seven days a week, 24 hours a day, it never stops.
How to make money
So all this writing and thinking and idea-sharing is fun and gratifying but can you make a living doing it? I think so.
Imagine a group of people who run Web servers writing for an ad hoc publication about Web servers. Since they're users, they tell their truth, they don't worry so much about offending. "This sucks, don't do that, if only someone would make *this* product, we'd buy it in droves." You hear a lot of that.
Last year I saw this happen among Linux server operators. Then I tried an experiment, I invited people from Cobalt and VA Linux, companies that make Linux servers, to watch. Well, it didn't happen, but if they had come, they would have learned about products that users want. From there, it isn't too hard to see how money is made. Make the product people want and sell it to them.
But many companies seem scared of users. Our culture says that people buy products that geniuses develop. Contact with the user is something to say you do, but there's not a whole lot of that going on.
The new journalism
So if the vendors won't come, what's to stop the users from becoming vendors? Further, if journalists won't write from a users' perspective, what's to stop the users from becoming journalists? With the Web, in computer and software products, not a whole lot. Could the users make the products they want for themselves? Yes they can. And can they make a profit doing it? Of course.
Remember Dell Computer started in Michael's dorm room. There's no reason new companies can't start on the Web. All it takes is the will to do it. And after computers every product that has an embedded computer will shift to user design. Today's companies become fulfillment houses, building products on contract. Manufacturing margins will shrink, the real value will be in the insight -- this is what people want now -- and the risk taken that today few manufacturers seem willing to take.
But listening to users is actually not that easy. It's easier to *be* a user and make products for other users. And that my friends, the combination of user-based information exchange and products that reflect user experience and wants, is where money will be made on the Internet.
Dave Winer