iLOR, LLC v. Google, Inc.

Filing 12

MOTION for Preliminary Injunction by iLOR, LLC (Attachments: # 1 Memorandum in Support Part 1# 2 Memorandum in Support Part 2# 3 Proposed Order # 4 Exhibit A# 5 Exhibit B# 6 Exhibit C# 7 Exhibit D# 8 Exhibit E# 9 Exhibit F# 10 Exhibit G# 11 Exhibit H# 12 Exhibit I# 13 Exhibit J# 14 Exhibit K# 15 Exhibit L# 16 Exhibit M# 17 Exhibit N# 18 Exhibit O# 19 Exhibit P# 20 Exhibit Q# 21 Exhibit R# 22 Exhibit S# 23 Exhibit T# 24 Exhibit U# 25 Exhibit V# 26 Exhibit W# 27 Exhibit X# 28 Exhibit Y# 29 Exhibit Z# 30 Exhibit AA# 31 Exhibit BB# 32 Exhibit CC# 33 Exhibit DD# 34 Exhibit EE# 35 Exhibit FF# 36 Exhibit GG# 37 Exhibit HH# 38 Exhibit II# 39 Exhibit JJ# 40 Exhibit KK# 41 Exhibit LL# 42 Exhibit MM# 43 Exhibit NN# 44 Exhibit OO# 45 Exhibit PP# 46 Exhibit QQ# 47 Exhibit RR# 48 Exhibit SS# 49 Exhibit TT# 50 Exhibit UU)(Faller, Susan)

iLOR, LLC v. Google, Inc.

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O'REILLY~
i:otnui.,r bOóIü . i:Øh"rGniies . oif1n. publishing

Published on O'Reilly (http://www.orellly.com/)

htto: / /www.oreillvnet.com/pub/a/orei¡ly/tim/news/2005/09/30/what-is-web-20.htm I

See this if you're having trouble printing code examples

What Is Web 2.0 Design Patterns and Business Models for the Next Generation of Software
by Tim O'Reily 09/30/2005

The bursting ofthe dot-com bubble in the fall of2001 marked a tung point
for the web. Many people concluded that the web was overhyped, when in fact bubbles and consequent shakeouts appear to be a common feature of all technological revolutions. Shakeouts typically mark the point at which an ascendant technology is ready to take its place at center stage. The pretenders
are given the bum's rush, the real success stories show their strength, and there

Read this aricle in:
. Chinese . French

. German
. Italian

begins to be an understanding of what separates one from the other.

. Japanese

. Korean

The concept of "Web 2.0" began with a conference brainstorming session
between O'Reily and MediaLive InternationaL. Dale Doughert, web pioneer

. SDanish

and O'Reily VP, noted that far from having "crashed", the web was more important than ever, with exciting new applications and sites popping up with surprising regularity. What's more, the companies
that had surived the collapse seemed to have some things in common. Could it be that the dot-com
collapse marked some kind of turning point for the web, such that a call to action such as "Web 2.0" might make sense? We agreed that it did, and so the Web 2.0 Conference was born.

since, the term "Web 2.0" has clearly taken hold, with more than 9.5 million citations in Google. But there's stil a huge amount of disagreement about iust what Web 2.0 means, with some people decrying it as a meaningless marketing buzzword, and others accepting it as the new
In the year and a half

conventional wisdom.

This aricle is an attempt to clarify just what we mean by Web 2.0.
In our initial brainstorming, we formulated our sense of

Web 2.0 by example:

Web 1.0

DoubleClick --~

Ofoto --~ Akamai --~
mp3 .com --~

Britannica Online --~
personal web

sites --~ evite --~

Web 2.0 Google AdSense Flickr BitTorrent Napster Wikipedia blogging upcoming.org and EVDB

EXHIBIT

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domain name speculation
page Views

--~ search engine optimization
--~ cost per click

screen scraping publishing content management systems
directories (taxonomy)

--~ web services
--~ participation

--~ wikis

o~ tagging ("folksonomy")
--~ syndication

stickiness

The list went on and on. But what was it that made us identify one application or approach as "Web 1.0"

and another as "Web 2.0"? (The question is particularly urgent because the Web 2.0 meme has become so widespread that companies are now pasting it on as a marketing buzzword, with no real understanding of just what it means. The question is paricularly difficult because many of those buzzword-addicted starps are definitely not Web 2.0, while some of the applications we identified as Web 2.0, like Napster and BitTorrent, are not even properly web applications!) We began trying to tease out the principles that are demonstrated in one way or another by the success stories of web 1.0 and by
the most interesting of

the new applications.

1. The Web As Platform
Like many important concepts, Web 2.0 doesn't have a hard boundary, but rather, a gravitational core. You can visualize Web 2.0 as a set of principles and practices that tie together a veritable solar system of sites that demonstrate some or all of those principles, at a varying distace from that core.
W~b 2.0 Mums l~ap

Web 2.0 that was developed at a brainstorming session during FOO Camp, a conference at O'Reily Media. It's very much a work in progress, but shows the many ideas that radiate out from the Web 2.0 core.
Figure i shows a "meme map" of

For example, at the first Web 2.0 conference, in October 2004, John Battelle and I listed a preliminary

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set of principles in our opening talk. The first of those principles was "The web as platform." Yet that was also a rallying cry of Web 1.0 darling Netscape, which went down in flames after a heated battle with Microsoft. What's more, two of our initial Web 1.0 exemplars, DoubleClick and Akamai, were both pioneers in treating the web as a platform. People don't often think of it as "web services", but in fact, ad serving was the first widely deployed web service, and the first widely deployed "mashup" (to use another term that has gained currency of late). Every banner ad is served as a seamless cooperation between two websites, delivering an integrated page to a reader on yet another computer. Akamai also treats the network as the platform, and at a deeper level of the stack, building a transparent caching and content delivery network that eases bandwidth congestion.

Nonetheless, these pioneers provided useful contrasts because later entrants have taken their solution to the same problem even further, understanding something deeper about the nature of the new platform. Both DoubleClick and Akamai were Web 2.0 pioneers, yet we can also see how it's possible to realize more of the possibilities by embracing additional Web 2.0 design patterns.
Let's dril down for a moment into each of these three cases, teasing out some of

the essential elements

of difference.
Netscape vs. Google

IfNetscape was the standard bearer for Web 1.0, Google is most certainly the standard bearer for Web 2.0, if only because their respective IPOs were defining events for each era. So let's start with a comparison of these two companies and their positioning.
the old software paradigm: their flagship product was the web browser, a desktop application, and their strategy was to use their dominance in the browser market to establish a market for high-priced server products. Control over standards for displaying content and applications in the browser would, in theory, give Netscape the kind of market power enjoyed by Microsoft in the PC market. Much like the "horseless carriage" framed the automobile as an
Netscape framed "the web as platform" in terms of extension of

the familiar, Netscape promoted a "webtop" to replace the desktop, and planed to populate

that webtop with information updates and applets pushed to the webtop by information providers who would purchase Netscape servers.
In the end, both web browsers and web servers turned out to be commodities, and value moved "up the stack" to services delivered over the web platform. Google, by contrast, began its life as a native web application, never sold or packaged, but delivered as a that service. None of the trappings of the old software industr are present. No scheduled softare releases, just continuous improvement.
service, with customers paying, directly or indirectly, for the use of

No licensing or sale, just usage. No porting to different platforms so that customers can ru the software

on their own equipment, just a massively scalable collection of commodity PCs running open source operating systems plus homegrown applications and utilities that no one outside the company ever gets
to see.

At bottom, Google requires a competency that Netscape never needed: database management. Google isn't just a collection of software tools, it's a specialized database. Without the data, the tools are useless; without the software, the data is unmanageable. Software licensing and control over APIs--the lever of power in the previous era--is irrelevant because the software never need be distributed but only performed, and also because without the ability to collect and manage the data, the software is of little use. In fact, the value of the software is proportional to the scale and dynamism of the data it helps to

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manage.

Google's service is not a server--though it is delivered by a massive collection of internet servers--nor a browser--though it is experienced by the user within the browser. Nor does its flagship search service even host the content that it enables users to find. Much like a phone call, which happens not just on the phones at either end of the call, but on the network in between, Google happens in the space between browser and search engine and destination content server, as an enabler or middleman between the user and his or her online experience.
While both Netscape and Google could be described as software companies, it's clear that Netscape
belonged to the same softare world as Lotus, Microsoft, Oracle, SAP, and other companies that got their star in the 1980's software revolution, while Google's fellows are other internet applications like

eBay, Amazon, Napster, and yes, DoubleClick and Akamai.

DoubleClick vs. Overture and AdSense
Like Google, DoubleClick is a true child of the internet era. It harnesses software as a service, has a core competency in data management, and, as noted above, was a pioneer in web services long before web services even had a name. However, DoubleClick was ultimately limited by its business modeL. It bought into the '90s notion that the web was about publishing, not paricipation; that advertisers, not consumers, ought to call the shots; that size mattered, and that the internet was increasingly being dominated by the top websites as measured by MediaMetrix and other web ad scoring companies.

As a result, DoubleClick proudly cites on its website "over 2000 successful implementations" of its software. Yahoo! Search Marketing (formerly Overte) and Google AdSense, by contrast, already serve hundreds of thousands of advertisers apiece.
Overture and Google's success came from an understanding of what Chris Anderson refers to as "the
long tail," the collective power of the small sites that make up the bulk of

the web's content.

DoubleClick's offerings require a formal sales contract, limiting their market to the few thousand largest
websites. Overte and Google figured out how to enable ad placement on virtally any web page. What's more, they eschewed publisher/ad-agency friendly advertising formats such as baner ads and
popups in favor of

minimally intrusive, context-sensitive, consumer-friendly text advertising.

The Web 2.0 lesson: leverage customer-selfservice and algorithmic data management to reach out to the entire web, to the edges and not just the center, to the long tail and not just the head.
Not surprisingly, other web 2.0 success stories demonstrate this same behavior. eBay enables occasional transactions of only a few dollars between single individuals, acting as an automated intermediary. Napster (though shut down for legal reasons) built its network not by building a centralized song database, but by architecting a system in such a way that every downloader also became a server, and thus grew the network.

A Platform Beats an Application
Every Time

In each of its past confrontations with rivals, Microsoft has successfully played the platform card, trumping even the most
dominant applications. Windows

Akamai vs. BitTorrent
Like DoubleClick, Akamai is optimized to do business with the head, not the tail, with the center, not the edges. While it serves

allowed Microsoft to displace
Lotus 1-2-3 with Excel,

WordPerfect with Word, and

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the benefit of

the individuals at the edge of

the web by

smoothing their access to the high-demand sites at the center, it collects its revenue from those central sites.

Netscape Navigator with Internet Explorer.
This time, though, the clash isn't

BitTorrent, like other pioneers in the P2P movement, takes a radical approach to internet decentralization. Every client is also
a server fies are broken up into fragments that can be served

from m~ltiple locations, transparently haressing the network of

downloaders to provide both bandwidth and data to other users. The more popular the fie, in fact, the faster it can be served, as there are more users providing bandwidth and fragments of the
complete file.

between a platform and an application, but between two platforms, each with a radically different business model: On the
one side, a single software

BitTorrent thus demonstrates a key Web 2.0 principle: the service automatically gets better the more people use it. While Akamai must add servers to improve service, every BitTorrent consumer brings his own resources to the part. There's an
implicit "architecture of paricipation", a. buil~-in ethic. of .

provider, whose massive installed base and tightly integrated operating system and APls give control over the programming paradigm; on the other, a system without an owner, tied together by a set of protocols, open standards and agreements for cooperation.
Windows represents the pinnacle of proprietary control via software APIs. Netscape tried to wrest control from Microsoft using the same techniques that Microsoft itself had used against other rivals, and failed. But Apache, which held to the open standards of the web, has prospered. The battle is no longer unequal, a platform versus a single application, but platform versus platform, with the question being which platform, and more profoundly, which architecture, and which business model, is better suited to the
opportunity ahead.

cooperation, in which the service acts primarily as an l?telIigent broker, connecting the edges to each other and harnessing the power of the users themselves.

2. Harnessing Collective Intellgence
The central principle behind the success of the giants born in the Web 1.0 era who have surived to lead the Web 2.0 era appears to be this, that they have embraced the power of the web to haress collective intellgence:
. Hyperlinking is the foundation of the web. As users add

new content, and new sites, it is bound in to the structue

the web by other users discovering the content and linking to it. Much as synapses form in the br~i.n, with associations becoming stronger through repetition or intensity, the web of connections grows organically as an output of the collective activity of all web users. . Yahoo!, the first great internet success story, was born as a catalog, or directory of links, an aggregation of the .best
of thousands, then millons of web users. Whle Yahoo! has since moved into the business of creating many types of content, its role as a portal to the collective work of the net's users remains the core of its value. work of

Windows was a briliant solution to the problems of the early PC era. It leveled the playing field for application developers, solving a host of problems that had
previously bedeviled the industr.

. Google's breakhrough in search, which quickly made it the undisputed search market leader, was PageRan, a
method of using the link structure of the web rather than just the characteristics of documents to provide better

But a single monolithic approach, controlled by a single vendor, is no
longer a solution, it's a problem.

search results.

· eBay's product is the collective activity of all its users; like the web itself, eBay grows organically in response to user activity, and the company's role is as an enabler of a

Communications-oriented systems, as the internet-as-platform most certainly is, require interoperability. Unless a vendor

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context in which that user activity can happen. What's more, eBay's competitive advantage comes almost entirely from the critical mass of buyers and sellers, which makes any new entrant offering similar services significantly less

attactive. . Amazon sells the same products as competitors such as Barnesandnoble.com, and they receive the same product descriptions, cover images, and editorial content from their vendors. But Amazon has made a science of user engagement. They have an order of magnitude more user reviews, invitations to paricipate in varied ways on
virtally every page--and even more importantly, they use

can control both ends of every interaction, the possibilties of user lock-in via software APIs are limited.

Any Web 2.0 vendor that seeks to lock in its application gains by
controllng the platform wil, by

definition, no longer be playing to the strengths of the platform.

user activity to produce better search results. While a Barnesandnoble.com search is likely to lead with the
company's own products, or sponsored results, Amazon

This is not to say that there are not
opportities for lock-in and

always leads with "most popular", a real-time computation based not only on sales but other factors that Amazon insiders call the "flow" around products. With an order of
magnitude more user participation, it's no surprise that

Amazon's sales also outpace competitors.

competitive advantage, but we believe they are not to be found via control over software APIs and protocols. There is a new game afoot. The companies that succeed in the Web 2.0 era will be those that understand the rules of that
game, rather than tring to go back

Now, innovative companies that pick up on this insight and perhaps extend it even fuher, are making their mark on the web:

to the rules ofthe PC softare era.

· Wikipedia, an online encyclopedia based on the unlikely notion that an entr can be added by any web user, and edited by any other, is a radical experiment in trst, applying Eric Raymond's
dictu (originally coined in the context of open source software) that "with enough eyeballs, all

bugs are shallow," to content creation. Wikipedia is already in the top 100 websites, and many think it wil be in the top ten before long. This is a profound change in the dynamics of content
creati on t

· Sites like del.cio.us and Flickr, two companies that have received a great deal of attention of late, have pioneered a concept that some people call "folksonomy" (in contrast to taxonomy), a style of collaborative categorization of sites using freely chosen keywords, often referred to as tags. Tagging allows for the kind of multiple, overlapping associations that the brain itself uses, rather than rigid categories. In the canonical example, a Flickr photo of a puppy might be tagged both "puppy" and "cute"--allowing for retrieval along natual axes generated user activity. · Collaborative spam filtering products like Cloudmark aggregate the individual decisions of email users about what is and is not spam, outperforming systems that rely on analysis of the messages themselves. · It is a truism that the greatest internet success stories don't advertise their products. Their adoption is driven by "viral marketing"--that is, recommendations propagating directly from one user to another. You can almost make the case that if a site or product relies on advertising to get the word out, it isn't Web 2.0. · Even much of the infrastructue of the web--inc1uding the Linux, Apache, MySQL, and Perl, PHP, or Python code involved in most web servers--relies on the peer-production methods of open source, in themselves an instance of collective, net-enabled intelligence. There are more than 100,000 open source software projects listed on SourceForge.net. Anyone can add a project, anyone can download and use the code, and new projects migrate from the edges to the center as a
result of

users putting them to work, an organc software adoption process relying almost entirely

on viral marketing.

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The lesson: Network effects from user contributions are the key to market dominance in the Web 2.0 era.

Blogging and the Wisdom of Crowds

have been around since the early days of

the Web 2.0 era is the rise ofblogging. Personal home pages the web, and the personal diary and daily opinion colum around much longer than that, so just what is the fuss all about?
One of the most highly touted features of

At its most basic, a blog is just a personal home page in diar format. But as Rich Skrenta notes, the chronological organization of a blog "seems like a trivial difference, but it drives an entirely different delivery, advertising and value chain."
One of the things that has made a difference is a technology called RSS. RSS is the most significant advance in the fundamental architecture of the web since early hackers realized that CGI could be used to create database-backed websites. RSS allows someone to link not just to a page, but to subscribe to it, with notification every time that page changes. Skrenta calls this "the incremental web." Others call it

the "live web".

Now, of course, "dynamic websites" (i.e., database-backed sites with dynamically generated content) replaced static web pages well over ten years ago. What's dynamic about the live web are not just the pages, but the links. A link to a weblog is expected to point to a perennially changing page, with "permalinks" for any individual entry, and notification for each change. An RSS feed is thus a much stronger link than, say a bookmark or a link to a single page.

RSS also means that the web browser is not the only means of viewing a web page. While some RSS aggregators, such as Bloglines, are web-based, others are desktop clients, and still others allow users of portable devices to subscribe to constantly
updated content.

The Architecture of Participation
Some systems are designed to

encourage participation. In his

RSS is now being used to push not just notices of new blog entries, but also all kinds of data updates, including stock quotes,
weather data, and photo availability. This use is actually a retu to one of its roots: RSS was born in 1997 out of the confluence
of Dave Winer's "Really Simple Syndication" technology, used to push out blog updates, and Netscape's "Rich Site Sumary", which allowed users to create custom Netscape home pages with regularly updated data flows. Netscape lost interest, and the

paper, The Cornucopia of

the

technology was caried forward by blogging pioneer Userland,

Winer's company. In the curent crop of applications, we see, though, the heritage of both parents.

But RSS is only par of what makes a weblog different from an ordinary web page. Tom Coates remarks on the significance of the permalink:

Commons, Dan Bricklin noted that there are three ways to build a large database. The first, demonstrated by Yahoo!, is to pay people to do it. The second, inspired by lessons from the open source community, is to get volunteers to perform the same task. The Open Directory Project, an open source Yahoo competitor, is the result. But Napster demonstrated a third way. Because
Napster set its defaults to

automatically serve any music that was downloaded, every user It may seem like a trivial piece of functionality now, but it automatically helped to build the value of the shared database. This was effectively the device that tured weblogs from an ease-of-publishing phenomenon into a conversational mess same approach has been followed

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of overlapping communities. For the first time it became relatively easy to gesture directly at a highly specific post on someone else's site and talk about it. Discussion emerged. Chat emerged. And - as a result - friendships emerged or became more entrenched. The permalink was the first - and most successful - attempt to build bridges
between weblogs.

by all other P2P fie sharing services.
One of the key lessons of

the Web

In many ways, the combination of RSS and permalinks adds the features ofNNTP, the Network News Protocol of the Usenet, onto HTTP, the web protocol. The "blogosphere" can 2.0 companies set inclusive defaults for aggregating user data be thought of as a new, peer-to-peer equivalent to Usenet and and building value as a side-effect bulletin-boards, the conversational watering holes of the early of ordinary use of the application. internet. Not only can people subscribe to each others' sites, and As noted above, they build easily link to individual comments on a page, but also, via a mechanism known as trackbacks, they can see when anyone else systems that get better the more links to t~eir pages, and can respond, either with reciprocal links, people use them. or by addmg comments. Mitch Kapor once noted that "architecture is politics." Interestingly, two-way links were the goal of early hypertext Participation is intrinsic to systems like Xanadu. Hypertext purists have celebrated Napster, par of its fudamental track backs as a step towards two way links. But note that architecture. trackbacks are not properly two-way--rather, they are really (potentially) symmetrical one-way links that create the effect of two way links. The difference may seem subtle, but in practice it This architectual insight may also be more central to the success of is enormous. Social networking systems like Friendster, Orkut, and LinkedIn, which require acknowledgment by the recipient in open source softare than the more frequently cited appeal to order to establish a connection, lack the same scalability as the volunteerism. The architecture of web. As noted by Caterina Fake, co-founder of the Flickr photo the internet, and the World Wide sharing service, attention is only coincidentally reciprocaL. Web, as well as of open source (Flickr thus allows users to set watch lists--any user can subscribe to any other user's photo stream via RSS. The object of software projects like Linux, Apache, and Perl, is such that attention is notified, but does not have to approve the users pursuing their own "selfish" connection.) interests build collective value as an automatic byproduct. Each of If an essential par of Web 2.0 is harnessing collective these projects has a small core, intelligence, tung the web into a kind of global brain, the well-defined extension blogosphere is the equivalent of constant mental chatter in the forebrain, the voice we hear in all of our heads. It may not reflect mechanisms, and an approach that the deep strctue of the brain, which is often unconscious, but is lets any well-behaved component be added by anyone, growing the instead the equivalent of conscious thought. And as a reflection what Larry Wall, of conscious thought and attention, the blogosphere has begun to outer layers of the creator of Perl, refers to as "the have a powerful effect. onion." In other words, these technologies demonstrate network First, because search engines use link structure to help predict effects, simply through the way useful pages, bloggers, as the most prolific and timely linkers, that they have been designed. have a disproportionate role in shaping search engine results. Second, because the blogging community is so highly selfreferential, bloggers paying attention to other bloggers magnifies These projects can be seen to have their visibility and power. The "echo chamber" that critics decry a natural architectue of is also an amplifier.
many of

2.0 era is this: Users add value. But only a small percentage of users will go to the trouble of adding value to your application via explicit means. Therefore, Web

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If it were merely an amplifier, blogging would be uninteresting. But like Wikipedia, blogging harnesses collective intelligence as a kind of fiter. What James Suriowecki calls "the wisdom of crowds" comes into play, and much as PageRank produces better results than analysis of any individual document, the collective attention of the blogosphere selects for value.

While mainstream media may see individual blogs as competitors, what is really unerving is that the competition is with the blogosphere as a whole. This is not just a competition
back room, decides what's important.

participation. But as Amazon demonstrates, by consistent effort (as well as economic incentives such as the Associates program), it is possible to overlay such an architecture on a system that would not normally seem to
possess it.

between sites, but a competition between business models. The world of Web 2.0 is also the world of what Dan Gilmor calls "we, the media," a world in which "the former audience", not a few people in a

3. Data is the Next Intel Inside
Every significant internet application to date has been backed by a specialized database: Google's web crawl, Yahoo!'s directory (and web crawl), Amazon's database of products, eBay's database of products and sellers, MapQuest's map databases, Napster's distributed song database. As Hal Varian remarked in a personal conversation last year, "SQL is the new HTML." Database management is a core competency of Web 2.0 companies, so much so that we have sometimes referred to these applications as "infoware" rather than merely softare.

This fact leads to a key question: Who owns the data?

In the internet era, one can already see a number of cases where control over the database has led to market control and outsized financial returns. The monopoly on domain name registry initially granted by governent fiat to Network Solutions (later purchased by Verisign) was one of the first great moneymakers of the internet. While we've argued that business advantage via controlling softare APIs is much more difficult in the age of the internet, control of key data sources is not, especially if those data sources are expensive to create or amenable to increasing retuns via network effects.
Look at the copyright notices at the base of every map served by MapQuest, maps.yahoo.com, maps.msn.com, or maps.google.com, and you'll see the line "Maps copyright NavTeq, TeleAtlas," or with the new satellte imagery services, "Images copyright Digital Globe." These companies made substantial investments in their databases (NavTeq alone reportedly invested $750 milion to build their database of street addresses and directions. Digital Globe spent $500 milion to launch their own satellite to improve on governent-supplied imagery.) NavTeq has gone so far as to imitate Intel's familiar Intel Inside logo: Cars with navigation systems bear the imprint, "NavTeq Onboard." Data is indeed the Intel Inside of these applications, a sole source component in systems whose softare infrastructue is largely open source or otherwise commodified.

The now hotly contested web mapping arena demonstrates how a failure to understand the importance of owning an application's core data wil eventually undercut its competitive position. MapQuest pioneered the web mapping category in 1995, yet when Yahoo!, and then Microsoft, and most recently Google, decided to enter the market, they were easily able to offer a competing application simply by licensing the same data.
Contrast, however, the position of Amazon.com. Like competitors such as Barnesandnoble.com, its original database came from ISBN registr provider RR Bowker. But unlike MapQuest, Amazon

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relentlessly enhanced the data, adding publisher-supplied data such as cover images, table of contents,
index, and sample materiaL. Even more importantly, they haressed their users to anotate the data, such

that after ten years, Amazon, not Bowker, is the primary source for bibliographic data on books, a reference source for scholars and librarians as well as consumers. Amazon also introduced their own proprietary identifier, the ASIN, which corresponds to the ISBN where one is present, and creates an equivalent namespace for products without one. Effectively, Amazon "embraced and extended" their
data suppliers.

Quest had done the same thing, harnessing their users to annotate maps and directions, value. It would have been much more difficult for competitors to enter the market just by licensing the base data.
Imagine if Map adding layers of

The recent introduction of Google Maps provides a living laboratory for the competition between application vendors and their data suppliers. Google's lightweight programing model has led to the creation of numerous value-added services in the form of mashups that link Google Maps with other internet-accessible data sources. Paul Rademacher's housingmaps.com, which combines Google Maps with Craigslist aparent rental and home purchase data to create an interactive housing search tool, is the pre-eminent example of such a mashup.
At present, these mashups are mostly innovative experiments, done by hackers. But entrepreneurial activity follows close behind. And already, one can see that for at least one class of developer, Google has taken the role of data source away from Navteq and inserted themselves as a favored intermediar. We expect to see battles between data suppliers and application vendors in the next few years, as both realize just how important certain classes of data wil become as building blocks for Web 2.0 applications.

The race is on to own certain classes of core data: location, identity, calendaring of public events, product identifiers and namespaces. In many cases, where there is significant cost to create the data, there may be an opportunity for an Intel Inside sty Ie play, with a single source for the data. In others, the
winner will be the company that first reaches critical mass via user aggregation, and turs that aggregated data into a system service.
For example, in the area of identity, PayPal, Amazon's I-click, and the milions of users of communications systems, may all be legitimate contenders to build a network-wide identity database. (In this regard, Google's recent attempt to use cell phone numbers as an identifier for Gmail accounts

may be a step towards embracing and extending the phone system.) Meanwhile, starps like Sxip are

exploring the potential of federated identity, in quest of a kind of "distributed I-click" that wil provide a seamless Web 2.0 identity subsystem. In the area of calendaring, EVDB is an attempt to build the world's largest shared calendar via a wiki-style architecture of paricipation. While the jury's stil out on the success of any particular startup or approach, it's clear that standards and solutions in these areas, effectively turing certain classes of data into reliable subsystems of the "internet operating system", will enable the next generation of applications.
A further point must be noted with regard to data, and that is user concerns about privacy and their rights to their own data. In many of the early web applications, copyright is only loosely enforced. For example, Amazon lays claim to any reviews submitted to the site, but in the absence of enforcement, people may repost the same review elsewhere. However, as companies begin to realize that control over data may be their chief source of competitive advantage, we may see heightened attempts at control.
Much as the rise of proprietar softare led to the Free Software movement, we expect the rise of

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proprietary databases to result in a Free Data movement within the next decade. One can see early signs of this countervailing trend in open data projects such as Wikipedia, the Creative Commons, and in softare projects like Greasemonkey, which allow users to take control of how data is displayed on their computer.

4. End of the Software Release Cycle
As noted above in the discussion of Google vs. Netscape, one of the defining characteristics of

internet

era software is that it is delivered as a service, not as a product. This fact leads to a number of fundamental changes in the business model of such a company:
1. Operations must become a core competency. Google's or Yahoo!'s expertise in product

development must be matched by an expertise in daily operations. So fundamental is the shift from software as artifact to software as service that the software wil cease to perform unless it is maintained on a daily basis. Google must continuously crawl the web and update its indices, continuously fiter out link spam and other attempts to influence its results, continuously and dynamically respond to hundreds of millions of asynchronous user queries, simultaneously matching them with context-appropriate advertisements.
It's no accident that Google's system administration, networking, and load balancing techniques are perhaps even more closely guarded secrets than their search algorithms. Google's success at automating these processes is a key par of their cost advantage over competitors.

It's also no accident that scripting languages such as PerL Python. PHP. and now Ruby. play such
a larg~.LQJ~ at web 2.0 companies. Perl was famously described by Hassan Schroeder, Sun's first

the internet." Dynamic languages (often called scripting languages and looked down on by the software engineers of the era of softare arifacts) are the tool of choice for system and network administrators, as well as application developers building dynamic systems that require constant change.
webmaster, as "the duct tape of

2. Users must be treated as co-developers, in a reflection of open source development practices

(even ifthe software in question is unlikely to be released under an open source license.) The open
source dictu, "release early and release often" in fact has morphed into an even more radical

position, "the perpetual beta," in which the product is developed in the open, with new features slipstreamed in on a monthly, weekly, or even daily basis. It's no accident that services such as Gmail, Google Maps, Flickr, del.cio.us, and the like may be expected to bear a "Beta" logo for
years at a time.

Real time monitoring of user behavior to see just which new features are used, and how they are used, thus becomes another required core competency. A web developer at a major online service remarked: "We put up two or three new features on some par of the site every day, and if users don't adopt them, we take them down. If they like them, we roll them out to the entire site."
Flickr, recently revealed that they deploy new builds up to hour. This is clearly a radically different development model! While not all web applications are developed in as extreme a style as Flickr, almost all web applications have a development cycle that is radically unlike anything from the PC or client-server era. It is for this reason that a recent ZDnet editorial concluded that Mjcrosoft won't be-lbk.tQ. beat Google: "Microsoft's business model depends on everyone upgrading their computing environment every
Cal Henderson, the lead developer of every half

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two to three years. Google's depends on everyone exploring what's new in their computing
environment every day."

While Microsoft has demonstrated enormous abilty to lear from and ultimately best its competition, there's no question that this time, the competition wil require Microsoft (and by extension, every ot~er existing softare company) to become a deeply different kind of company. Native Web 2.0 compames enjoy a natural advantage, as they don't have old patterns (and corresponding business models and revenue sources) to shed.

5. Lightweight Programming Models
Once the idea of web services became au courant, large companies jumped into the fray with a complex web services stack designed to create highly reliable programing environments for distributed applications.

A Web 2.0 Investment Thesis
Ventue capitalist Paul Kedrosky wrtes: "The key is to find the

actionable investments where you
disagree with the consensus". It's

But much as the web succeeded precisely because it overthrew much of hypertext theory, substituting a simple pragmatism for ideal design, RSS has become perhaps the single most widely
deployed web service because of its simplicity, while t~e .

interesting to see how each Web 2.0 facet involves disagreeing with
the consensus: everyone was

complex corporate web services stacks have yet to achieve wide deployment.
Similarly, Amazon.com's web services are provided in two
forms: one adhering to the formalisms of

emphasizing keeping data private, FlickrlNapster/et aL. make it
public. It's not

just disagreeing to

be disagreeable (pet food! online!),
it's disagreeing where you can

the SOAP (Simple

Object Access Protocol) web services stack, the other simply providing XML data over HTTP, in a lightweight approach sometimes referred to as REST (Representational State Transfer). While high value B2B connections (like those between Amazon and retail partners like ToysRUs) use the SOAP stack, Amazon reports that 95% of the usage is of the lightweight REST service.

build something out of the differences. Flickr builds communities, Napster built breadth of collection.
Another way to look at it is that the successful companies all give up something expensive but considered critical to get something valuable for free that
was once expensive. For example,

This same quest for simplicity can be seen in other "organic" web services. Google's recent release of Google Maps is a case in point. Google Maps' simple AJAX (Javascript and XML) interface was quickly decrypted by hackers, who then proceeded to remix the data into new services. Mapping-related web services had been available for some time from GIS vendors such as ESRI as well as from MapQuest and Microsoft MapPoint. But Google Maps set the world on fire because of its simplicity. While experimenting with any of the formal vendor-supported web services required a formal contract between the parties, the way Google Maps was implemented left the data for the taking, and hackers soon found ways to creatively re-use that data.
There are several significant lessons here:

Wikipedia gives up central editorial control in retu for speed and breadth. Napster gave up on the idea of "the catalog" (all the songs the vendor was selling) and got breadth. Amazon gave up on the idea of having a physical storefront but got to serve the entire world. Google gave up on the big customers (initially) and got the 80% whose needs weren't
being met. There's something very

aikido (using your opponent's force against them) in saying "you
know, you're right--absolutely

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1. Support lightweight programming models that allow for
loosely coupled systems. The complexity of

the corporate-

sponsored web services stack is designed to enable tight coupling. While this is necessary in many cases, many of the most interesting applications can indeed remain loosely

anyone in the whole world CAN update this aricle. And guess what, that's bad news for you."

coupled, and even fragile. The Web 2.0 mindset is very --Nat Torkington
different from the traditional IT mindset! 2. Think syndication, not coordination. Simple web services, like RSS and REST-based web services, are about syndicating data outwards, not controllng what happens when it gets to the other end of the connection. This idea is fudamental to the internet itself, a reflection of what is known as the end-to-end principle.
3. Designfor "hackabilty" and remixabilty. Systems like the original web, RSS, and AJAX all have

this in common: the barriers to re-use are extremely low. Much of the useful software is actually open source, but even when it isn't, there is little in the way of intellectual propert protection. The web browser's "View Source" option made it possible for any user to copy any other user's
web page; RSS was designed to empower the user to view the content he or she wants, when it's

wanted, not at the behest of the information provider; the most successful web services are those that have been easiest to take in new directions unimagined by their creators. The phrase "some rights reserved," which was popularized by the Creative Commons to contrast with the more typical "all rights reserved," is a useful guidepost.

Innovation in Assembly
Lightweight business models are a natural concomitant of lightweight programing and lightweight connections. The Web 2.0 mind set is good at re-use. A new service like housingmaps.com was built simply by snapping together two existing services. Housingmaps.com doesn't have a business model (yet)--but for many small-scale services, Google AdSense (or perhaps Amazon associates fees, or both) provides the snap-in equivalent of a revenue modeL.
These examples provide an insight into another key web 2.0 principle, which we call "innovation in assembly." When commodity components are abundant, you can create value simply by assembling them in novel or effective ways. Much as the PC revolution provided many opportities for innovation in assembly of commodity hardware, with companies like Dell making a science out of such assembly, thereby defeating companies whose business model required innovation in product development, we believe that Web 2.0 wil provide opportities for companies to beat the competition by getting better at harnessing and integrating services provided by others.

6. Software Above the Level of a Single Device
One other feature of Web 2.0 that deserves mention is the fact that it's no longer limited to the PC platform. In his paring advice to Microsoft, long time Microsoft developer Dave Stutz pointed out that
to come."

liD seful software written above the level of the single device wil command high margins for a long time

Of course, any web application can be seen as softare above the level of a single device. After all, even the simplest web application involves at least two computers: the one hosting the web server and the one hosting the browser. And as we've discussed, the development of the web as platform extends this idea to synthetic applications composed of services provided by multiple computers.
But as with many areas of

Web 2.0, where the "2.0-ness" is not something new, but rather a fuller

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realization of the true potential of the web platform, this phrase gives us a key insight into how to design applications and services for the new platform. this principle. This application seamlessly reaches from the handheld device to a massive web back-end, with the PC acting as a local cache and control station. There have been many previous attempts to bring web content to portable devices, but the iPodiiTunes combination is one of the first such applications designed from the ground up to span multiple devices.
To date, iTunes is the best exemplar of

TiV 0 is another good example.

Web 2.0. They are not web the web platform, making it a seamless, almost invisible part of their infrastructure. Data management is most clearly the hear of their offering. They are services, not packaged applications (although in the case of iTunes, it can be used as a packaged application, managing only the user's local data.) What's more, both TiVo and iTunes show some budding use of collective intellgence, although in each case, their experiments are at war with the IP
iTunes and TiVo also demonstrate many ofthe other core principles of applications per se, but they leverage the power of

lobby's. There's only a limited architecture of paricipation in iTunes, though the recent addition of

podcasting changes that equation substantially.
This is one ofthe areas of Web 2.0 where we expect to see some of the greatest change, as more and more devices are connected to the new platform. What applications become possible when our phones and our cars are not consuming data but reporting it? Real time traffc monitoring, flash mobs, and citizen journalism are only a few of the early warning signs of the capabilities of

the new platform.

7. Rich User Experiences
As early as Pei Wei's Viola browser in i 992, the web was being used to deliver "applets" and other kinds of active content within the web browser. Java's introduction in 1995 was framed around the delivery of such applets. JavaScript and then DHTML were introduced as lightweight ways to provide client side programmability and richer user experiences. Several years ago, Macromedia coined the term "Rich Internet Applications" (which has also been picked up by open source Flash competitor Laszlo Systems) to highlight the capabilities of Flash to deliver not just multimedia content but also GUI-style application experiences.

the web to deliver full scale applications didn't hit the mainstream til Google introduced Gmail, quickly followed by Google Maps, web based applications with rich user interfaces and PC-equivalent interactivity. The collection of technologies used by Google was chrstened AJAX, in a seminal essay by Jesse James Garett of web design firm Adaptive Path. He wrote:
However, the potential of

"Ajax isn't a technology. It's really several technologies, each flourishing in its own right, coming together in powerful new ways. Ajax incorporates:

· standards-based presentation using XHTML and CSS; · dynamic display and interaction using the Document Object Model;
. data interchange and manipulation using XML and XSL T; . asynchronous data retrieval using XMLHttpRequest;
. and JavaScript binding everything together."

Web 2.0 applications such as Flickr, now par of Yahoo!,
AJAX is also a key component of

Web 2.0 Design Patterns

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37signals' applications base

camp and backpack,

as well as other Google applications such as Gmail and Orkut. We're entering an unprecedented period of user interface innovation, as web developers are finally able to build web applications as rich as local PC-based applications.

Interestingly, many of the capabilities now being explored have been around for many years. In the late '90s, both Microsoft and Netscape had a vision of the kind of capabilities that are now finally being realized, but their battle over the standards to be used made cross-browser applications difficult. It was only when Microsoft definitively won the browser wars and there was a single de-facto browser standard to write to that this kind of application became possible.' And while Firefox has reintroduced competition

In his book, A Pattern Language, Christopher Alexander prescribes a format for the concise description of the solution to architectural problems. He writes: "Each pattern describes a problem that occurs over and over again in our environment, and then describes the core of the solution to that problem, in such a way that you can use this solution a milion times over without
ever doing it the same way twice. " '

1. The Long Tail
Small sites make up the bulk of the internet's content; narrow niches make up the bulk of internet's the possible applications. Therefore: Leverage customerself service and algorithmic data management to reach out to the entire web , to the edges and not just the center, to the long tail and not just the head. 2. Data is the Next Intel Inside Applications are increasingly data-driven. Therefore: For competitive advantage, seek to own a unique, hard-to-recreate source of data.

.'

to the browser market, at least so far we haven't

seen the destrctive competition over web
standards that held back progress in the '90s.

We expect to see many new web applications over the next few years, both truly novel applications, and rich web reimplementations of PC applications. Every platform change to date has also created opportunities for a leadership change in the dominant applications of the
previous platform.

3. Users Add Value

The key to competitive advantage in internet applications is the extent to which users add their own data to that which you
provide. Therefore: Don't restrict your

~mail ~as already provided some interesting Innovations in email, combining the strengths of the web (accessible from anywhere, deep database competencies, searchability) with user interfaces that approach PC interfaces in usability. Meanwhile, other mail clients on the PC platform are nibbling away at the problem from the other end, adding 1M and presence capabilities. How far are we from an integrated communications client combining the best of
email, 1M, and the cell phone, using

"architecture of paricipation" to software development. Involve your users both implicitly and explicitly in adding value to your application. 4. Network Effects by Default Only a small percentage of users will go to the trouble of adding value to your
application. Therefore: Set inclusive

defaults for aggregating user data as a sideeffect of their use of

the application.

5. Some Rights Reserved. Intellectual

V oIP to add

propert protection limits re-use and
prevents experimentation. Therefore: When

voice capabilities to the rich capabilities of

web

applications? The race is on.
It's easy to see how Web 2.0 will also remake the address book. A Web 2.0-style address book would treat the local address book on the PC or
phone merely as a cache of

benefits come from collective adoption, not
private restriction, make sure that barers to

the contacts you've

adoption are low. Follow existing standards, and use licenses with as few restrictions as possible. Design for "hackability" and "remixabilty. "
6. The Perpetual Beta

explicitly asked the system to remember. Meanwhile, a web-based synchronization agent,

When devices and programs are connected

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Gmail-style, would remember every message sent or received, every email address and every phone number used, and build social networking heuristics to decide which ones to offer up as
alternatives when an answer wasn't found in the

local cache. Lacking an answer there, the system would query the broader social network.

A Web 2.0 word processor would support wikistyle collaborative editing, not just standalone documents. But it would also support the rich formatting we've come to expect in PC-based word processors. Writely is a good example of such an application, although it hasn't yet gained wide traction.

to the internet, applications are no longer software artifacts, they are ongoing services. Therefore: Don't package up new features into monolithic releases, but instead add them on a regular basis as par of the normal user experience. Engage your users as realtime testers, and instrument the service so that you know how people use the new features.
7. Cooperate, Don't Control

Web 2.0 applications are built of a network
of cooperating data services. Therefore:

Nor wil the Web 2.0 revolution be limited to PC applications. Salesforce.com demonstrates how the web can be used to deliver software as a service, in enterprise scale applications such as
CRM.

The competitive opportnity for new entrants is
to fully embrace the potential of

Web 2.0. Companies that succeed wil create applications

that lear from their users, using an architectue

of paricipation to build a commanding advantage
not just in the software interface, but in the

Offer web services interfaces and content syndication, and re-use the data services of others. Support lightweight programming models that allow for loosely-coupled systems. 8. Software Above the Level of a Single Device The PC is no longer the only access device for internet applications, and applications that are limited to a single device are less valuable than those that are connected. Therefore: Design your application from the get-go to integrate services across handheld devices, PCs, and internet servers.

richness of the shared data.
Core Competencies of

Web 2.0 Companies

Web 2.0. those key principles, but may miss others. Let's close, therefore, by summarizing what we believe to be the core competencies of Web 2.0 companies:
In exploring the seven principles above, we've highlighted some ofthe principal features of Each of the examples we've explored demonstrates one or more of

. Services, not packaged software, with cost-effective scalability

· Control over unique, hard-to-recreate data sources that get richer as more people use them
. Trusting users as co-developers

. Haressing collective intellgence
. Leveraging the long tail through customer self-service . Software above the level of a single device

· Lightweight user interfaces, development models, AND business models
The next time a company claims that it's "Web 2.0," test their features against the list above. The more points they score, the more they are worthy of the name. Remember, though, that excellence in one area may be more telling than some small steps in all seven.
Tim O'Reily

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O'Reily Media, Inc., tim~oreily.com
President and CEO
Copyright (Ç 2007 O'Reilly Media, Inc.

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