Home Tim O’Reilly Interview, Part 1: Web 2.0

Tim O’Reilly Interview, Part 1: Web 2.0

Welcome to the second in my series of Web 2.0 interviews, in which I interview
people in the Web community who are building or shaping Web 2.0 – i.e. the Web as Platform. And
who better to talk to than the person who organized the hugely successful Web 2.0 conference held in San Francisco in October
2004, Tim O’Reilly.

Tim O’Reilly is the founder and CEO of O’Reilly
, one of the most successful computer book and online media publishers in the world. I
won’t regurgitate Tim’s official
, but let me put this interview into a personal perspective. As an English Lit
major from the early 90’s and a passionate Webhead now, my niche is at the intersection
of Publishing and the Web. Tim was one of the people who invented that
intersection, so it was a thrill to talk to Tim and I thank him for granting an interview
to an unknown blogger from New Zealand.

This interview will be published here on Read/Write Web in 3 instalments. The first
instalment is focused on Web 2.0 and web technology. In
Part 2 we explore business models for Web content – including discussion of RSS. Part 3
is about books and publishing in particular, but also covers social software and Remix

If you’d like to be notified when Parts 2 and 3 are published, I invite you to
subscribe to my RSS feed (right-click
and copy to your favourite RSS Aggregator). Here is Part 1 for you now:

Web 2.0 Conference Review   

Richard: Before the Web 2.0 conference,
in your article Ask Jeff Bezos, Adam
, you talked about wanting to gather insights into the success (and
future) of Web 2.0 companies such as Google, Amazon, Apple. Now that the conference is
over, what were the key insights about Web 2.0 that you personally got from the
conference – which you didn’t know beforehand? 

Tim: When you work on putting together the program, you know what’s in it, so I
wasn’t surprised terribly much by anything. There were a few things that stood out,
though. For example, Mark Cuban’s insistence that HD [High Definition] makes movies safer
from the MPAA’s online piracy fears is an interesting application of an idea that I’ve
been aware of for some time – namely that storage is getting cheaper faster than
bandwidth [is getting cheaper]. And of course, we were all waiting to see who Mark would

Kapor, Doctorow and Lessig raised “awareness
of the profound political and legal dimensions of Web 2.0.”

I was also blown away by the lineup of Mitch Kapor, Cory Doctorow, and Larry Lessig.
I’ve heard all of them speak before – each of them has been at my conferences many times
– but I thought that together they made a really rousing combination, raising awareness
of the profound political and legal dimensions of Web 2.0. As Larry has often said, we
can’t let the past use legal means to prevent the future from happening! 

There were also a couple of things that came up at the last minute. For instance, we
had a High Order Bit by
an old friend of mine, Andrew Singer, about reconfigurable computing
and the performance and low power possibilities there. It came out because I sent him an
invite to the conference and he said: “Oh I’d like to present something I’m doing”. That
was a surprise thing, because John and I hadn’t planned for it in the program until the
very last minute. This is the kind of technology out of left field that could really
change the rules. I’ve been following FPGAs and other forms of reconfigurable computing,
but I hadn’t realized that it could lower the power consumption so much – which could
have real implications for portable devices. 

Apple and Web 2.0

Richard: In the blog coverage of Web 2.0 I heard a lot about Amazon, Google and
Yahoo!, but I didn’t hear a lot about Apple… 

“[Apple is like] Moses showing the way to the promised land, but they don’t actually
go there.”

Tim: Apple is in a position they’ve been in a lot of times before. They’re like
Moses showing the way to the promised land, but they don’t actually go there. In a lot of
my talks I use iTunes as an example of what
Dave Stutz calls “software above the level of a single device.” Here is this application
designed from the get-go to span the handheld to the server, with the PC a way station.
And that’s a paradigm for the future. But because Apple ends up with a closed platform,
they don’t necessarily take that out to the industry. Someone else adopts the ideas and
takes them further. I think we’re seeing that the wave of innovation that Mac OS X represented has really inspired a lot of

And even as far as their participation in the conference goes, it was a bit of a
disappointment. They had promised to send Eddy Cue, who runs the iTunes business, but at
the last minute he dropped out and sent a substitute. That’s a sign that Apple doesn’t
take reaching out to this tech audience as seriously as they should. 

Microsoft and Web 2.0

Richard: A key part of the Web 2.0 theory is “the commoditization of software”
– how the value is now in the services enabled by that software. It seems though that the
elephant in the room is still Microsoft, who remain committed to locking users in with
their software – e.g. Longhorn is the next generation of that strategy. Do you
think the success of Web 2.0 is dependent on Microsoft’s software-focused strategy
failing? Or can Web 2.0 and Longhorn co-exist and both succeed? 

“I think the business model of Microsoft is going to have to change.”

Tim: First of all I think that there’s never a clear succession. You know, IBM
didn’t go away when the PC took over as the center of the computing landscape. But
they had to change. And I think Microsoft will have to change. I think that the business
of Microsoft, the company of Microsoft, is going to continue to succeed. But I think the
business model of Microsoft is going to have to change.  

And I don’t think that Longhorn will change the dynamics all that significantly.
There’s some pretty wonderful technology in Longhorn. But if you look at the release
cycle, you’re talking 5-6 years – and now they’re saying, well maybe we better accelerate
and take some pieces and put Avalon into Windows XP rather than waiting for the full
Longhorn. But they can’t just keep up with the pace of a Web-based offering where you can
roll out new products to all your users without even asking, and update products
dynamically. I just think that [Web-based] software services have a better model. So I
think that Microsoft will continue to dominate on the PC, but the PC is going to be a
smaller and smaller part of the entire business.  

Similarly I think that Microsoft will increasingly feel margin pressure from Linux as
well as people saying: well actually the applications that really matter to me are not on
my PC. And so they’re going to be able to extract less of a monopoly rent, so to speak.
This is very similar to what happened to IBM – they had to shed hundreds of thousands of
workers, they went from being an industry goliath to simply being an industry giant! I
think that’s exactly what will happen to Microsoft. They will lose their pre-eminent
position, but they will still be an extremely powerful and successful company. 

Network Effects and Service Levels

Richard: Talking a bit more about how Web 2.0 is about services rather than
software… you argue that once a Web 2.0 company reaches a certain level of users and
“the network effect” kicks in – it becomes hard for new entrants to break into that
market. Is there a danger that service levels at the dominant companies (like EBay and
Amazon) will eventually slip and they get away with it, in much the same way that
Microsoft has let the quality of Internet Explorer slip? That is, the users will persist
with the service because it is “good enough”? 

“…there will be companies that get lazy because they think they’ve got it all sewn

Tim: Yes I think there’s absolutely truth in that observation. I think that
companies always become complacent, over time. Or most companies, that is. There are
great companies that continue to hold the dominant position for hundreds of years – think
Proctor & Gamble for example – by continuing to
innovate. And I would say that some of these companies will survive and continue to be
innovative companies. Others will struggle.  

And again you can also see companies that coast on their laurels for a while and then
wake up – Yahoo!‘s a good example right now. Yahoo!
started out as an Internet darling and ended up becoming a bit of a stodgy media company
in the model of AOL. But they’re really waking up now and they’re inventing a lot of cool
new stuff. The competition with Google has made them realize they’ve got to get their act
together and I think they’re responding.  

So I think we’ll see a lot of ebb and flow and back and forth, and yes – there will be
companies that get lazy because they think they’ve got it all sewn up. But that’s sort of
a natural thing that happens in business, I don’t think there’s anything unique to Web
2.0 about it.

Data Ownership and Lock-in

Richard: From a user perspective rather than a developer perspective, a lot of
what Web 2.0 is about is users producing content and not just consuming it. An
example you’ve used in the past to illustrate this is the “user added value” on Amazon,
compared to say its online competitor Barnes & Noble. The other side of that coin
though is the “data lock-in” of users, where users may not necessarily have control over
their content. Is this something for users to be concerned about, given that people are
used to having relative control over the data on their desktop? 

“It’s that data mobility zone that actually creates a lot of the free-flow ideas on
the Net.”

Tim: Absolutely. I actually ran a couple of panels on this at our Open Source
convention, a year and a half or two years ago – called ‘Open Data – Do We Need a Bill of
Rights for Web Services?’. We had people from Amazon, EBay and others trying to answer
that question: what does it mean when we’re investing our online data in these sites?
Will we end up with something like the Open Source movement because the companies have
ended up locking in their users? And we see this right now – for example the Danger Hiptop.
They basically tried to lock-in their users. So there are companies that are trying to
use data lock-in as a competitive tool – and there will eventually be a recognition that
this is a problem.  

But the actual data ownership is maybe less important, in some areas, than people
think. When we talk about user-contributed data, we’re not just talking about my
data proper (as in having your mail stored on Gmail or Yahoo! Mail or whatever.) We’re
also talking about a kind of content that users are contributing to a collective work. So
for example, Amazon Reviews – people don’t really care about that in the same way.
They’re not saying “Oh I created that review and I want to be able to export it to Barnes
& Noble as well”. They’re creating it in a particular context of that

“In some ways, we’re re-defining what fair use means.”

And when you think about ownership, it really gets portrayed as black and white – when
in fact it’s grey. It’s kind of like valance
, where data has a center of attraction but it also is free to move. So when
I write an Amazon review, it is mine in some sense – and you’ll find that when people
submit reviews to Amazon, they may also submit them to somewhere else because they have a
copy of it. And nobody particularly cares. It’s that data mobility zone that actually
creates a lot of the free-flow ideas on the Net.  

In some ways, we’re re-defining what fair use means. Sometimes people send
round entire stories, sometimes people get sent a New York Times article and they post it
to a mailing list. Is that ‘fair use’ – maybe not, but maybe we’re re-defining fair use.
And I think there’s just a lot of experimentation, a lot of understanding of what this
new medium means – that we have to come to grips with. One of Lessig’s key points is that
we don’t know how these things are going to work out, and we need to give them time to
develop before we legislate about them. 

“I believe that data lock-in of various kinds is going to be one of the key tools of
business advantage in the internet era.”

But anyway, back to your point. Despite what I’ve said about redefining the boundaries
of fair use, and the free flow of data in collective works, data lock-in absolutely
should be a concern. I believe that data lock-in of various kinds is going to be one of
the key tools of business advantage in the internet era. I think that as companies
realize this, they will figure out how to be evil – so to speak (to use Google’s
terminology) – and I predict that we will in fact have some major battles in that

To be continued in Parts 2 and 3…

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