Quote: "The vast majority of visitors are the Internet equivalent of the television generation's couch potatoes -- voyeurs who like to watch rather than create."
This quote is so bang on accurate.
Too many developers enter the Web 2.0 dream with stars in their eyes. The biggest challenge with "user generated content" is offering something compelling enough to get users to participate. A good Web 2.0 site is the difference between an entertainer who can get the crowd to their feet and a lounge act in Vegas that motivates that crowd to order a second drink and hit the tables rather than heading to a competing casino. In Vegas you have the luxury of getting the crowd drunk. Not so much on the Web.
Google gets the crowd to leap to their feet (stone cold sober) and come back for more with a search-algo that hits it out of the park with every search. What can you do? What can I do to implement and execute with the tools we have in a way that moves the masses? The answer to that question is the difference between Domain 1.0 and Domain 2.0.
Paid search coupled with domain names has historically been the Domain 1.0 fix. "Hate it or love it the dog's on top", 50cent wrote.. and domains have been that dog, driving paid search in a benign, inert manner since the dawn of the commercial Internet. In 1999 Goto.com rolled out a pay-per-click advertising implementation and a few early domainers capitalized on that implementation with sites that mated targeted results with the subject matter that the name describes. How good were these early implementations? It took until late 2005 and a Paul Sloan article until everyone said "Hey.. wait a minute! That's too easy!" and started to jawbone faults with the implementation. So today, 8 years after domain owners began making money through paid search, very little is different.
It's been my experience that lightning bulb moments on the Internet, prove their concept in the first moments. Even in the earliest days, pay per click advertising was 'immediately' so much better than the previous CPM, RON display ad alternative.. You could move all kinds of traffic to a paid search network and monetize most searches in a more effective (higher margin) way; and much more elegantly than stuffing web-pages full of banner ads.
I have seen perhaps one such watershed since. No video advertising, no CPA, no pay per call, nothing has had the "Wow, this is different" effect like PPC. Arbitrage is the only thing that comes close.
The Internet was built on Arbitrage. Buying type in visits from a domain name owner or third-party site in order to inflate the purchaser's traffic numbers. That's the cornerstone of the commercial Internet. Look at the top 50 US websites. They are all engaged in arbitrage of one kind or another. Very few can naturally marshal millions of return visits out of thin air (nod to IRS.gov, MSN Error search). The vast majority of all websites has to 'advertise' to get people to the door. For domain owners, buying their names as keywords from the search engines may give their revenues that unexpected pop which they used to get for free.
So here we are again, you have some domain folks who have not bought a significant domain name since 2000 (making more money through paid search than ever). You have others who have rolled up thousands of sites doing very well. Still others have sold out completely to new ventures who hope to create user generated content (which will motivate the masses to contribute) and others still, breaking big portfolios down through a combination of paid search and selling the very domain names they bought in bulk.
Like a technical agnostic, I stand here wondering.. Is this all there is? Is there nothing on the other side? No Domain 2.0 magic ready to take us all away to the promised land?
I hypothesize that the difference is what we know. We all know that there is a bare din level of person-visit that comes to generic domain names for nothing more than the keyword weight or gravity of the domain names themselves. These visits have nothing to do with cybersquatting, former sites or misleading.. if you own a generic name like MuffinRecipes.com or Sailboats.net some people will type that name just because they are curious about the subject matter and the ".com, net etc " which are powerful extensions for drawing type-in visitors. These folks want to explore the Web, not just the top 20 results they can find on the first two pages of most search engines. People type the names to explore for something new related to the subject they are interested in. That single attribute, that characteristic of domain names will continue to bring people to the domainer's doorstep long after I turn to dust. Own the websites and control that navigation.
How do we implement and execute beyond a page of PPC listings? I have not yet found a better formula to make more money. Perhaps the better formula is raising prices. We all know that advertisers are willing and able to pay more for quality traffic than they presently are. While arbitrageurs cry the blues on Webmasterworld that "PPC prices are too high", the average real business bidders are cooing about the smokin' deal that PPC ads represent over traditional media. Nobody ever posts when they are getting a super deal, lest the competition move in. So one challenge is finding a way to convince non keyword arbitraging bidders to open their hearts, minds and wallets further for exactly the same traffic; traffic they have been getting way too cheap for too long.. Another challenge lies with the domain owner. Domain registrants of all shapes and colors need to execute better to provide more useful, targeted PPC pages - some of that being provided by the upstream PPC partner. I am talking about more targeted, better versions of what we have now. A delivery of advertising that makes folks say, 'Wow'.
If there is another better implementation it is with us now, overlooked or ignored in some small booth at the Web 2.0 conference; like Speilberg's 'Ark of the Covenant' in some undiscovered crate in a government warehouse. In the mean time, raised prices for ads, facilitated through something like Sendori.com's pay per unique or ad rate minimums through YHOO/GOOG; fully developed verticals and arbitrage. A combination of those four. That's what we know for sure. That is the way in 2007. Web 2.0, Ajax and Ruby don't drive more sales .. better mousetraps drive more sales. I have not seen a revolutionary new domain name implementation mousetrap beyond what is generally known. Those four and larger versions of those 4 are what moves the needle.. In the mean time, keep consolidating, getting bigger and looking for the Ark.