Goldfish Swims Lap 2.0
The short memories of the Internet are amazing.
First, Google Base was going to take over eBay. Now, Microsoft is starting a classifieds service. But with social networking! And SatelliteMaps! Look out everyone from Craigslist to newspaper firms!
I really don’t want to sell my couch to the highest bidder. I would prefer to see it in my friend’s living room. And before my friend buys it, he’d like to see it on a satellite map. God. Help. Us.
Paul Kedrosky, who usually has good things to say, said that “It is also worth noting that the service will free to users (both buyers and sellers), with all the revenue coming from ads.”
More surprisingly, he said it without flinching. Free ads, supported by paid ads! I knew Web 2.0 was different!
Not to be outdone, Gartner analyst Van Baker said: “There’s room for more than one player here, there’s room for more than two players”.
Yep that’s why Yahoo has wasted hundreds of millions of dollars going nowhere Van - because there is room for more than two players!
Classifieds properties are marketplaces. Marketplaces have network effects, meaning that more buyers attract more sellers, who then attract more buyers. The natural number of marketplaces is one. That’s the way buyers and sellers like it. Who that one is can change, but only if the incumbent marketplace gets too greedy and too irresponsive.
That’s why craigslist’s traffic has almost tripled since last year (please ignore the irony of me linking to a New York Times article to back up an argument. Thank you, we now return you to the post). And that’s why eBay is continuing to grow very strongly.
Once opportunities reach a certain scale it becomes more and more difficult for the firms to take their eye off the prize. In search for instance, Alta Vista and Yahoo lost out, but because there was no money in search then that wasn’t a particularly sad day for each of those firms at the time.
The principle makes over-taking the market leader in a huge industry with new features harder and harder, because if they are making so much money and they see that users like a feature on a startup that is betting its whole future on that one feature, then they integrate it before the leaking of users gets too much. Not to mention that in search the are no network effects, only better mouse traps, whereas in classifieds there are and the mouse trap effect is less.
And by the way, I don’t think limiting the audience of buyers to your buddy list is a killer feature. And just in case, satellite maps aren’t either.
Perhaps even scarier for Microsoft, is that in a financial sense they are competing with a juggernaut who is not motivated by profit. That’s a tough business to be in.
But if Fremont has ajax and if Bill sends an email around then people will get excited and eBay’s stock price will go down by a dollar because they are doomed and then weeks later it will go up by 10 dollars because it isn’t doomed anymore. And so the sands through the hourglass…
p.s. Perhaps we should call the AJAX’ing of prior failed ideas or strategies like “putting lipstick on a Goldfish”?
