The Typical Evolution of a Dot Com Model

dot com evolution

I had an interesting thought the other day and wondered if there was a specific pattern most dot com models followed as they gave birth and evolved on the Internet. I thought it would be neat if one could actually chalk this out… listing the basic steps that happened on the birth and evolution of a new generic dot com model – as it was born and evolved on the Internet.

Although the title is named “dot com model” – it could be applied to basically any Internet Website or Online model. I have used the term “dot com model” merely for convenience – as people are more familiar with it.

Below, is how I feel things pan out for dot com models that are easily copy-able (almost all) and do not have a high “lock-in” and “community interdependence” value. But, before I get to my study of the evolution of a dot com model – I thought I’d clarify just what I meant by lock-in and community interdependence?

Sometimes, a “lock in” dot com model is created which by its very nature is monopolistic or oligopolistic (dominated by just a few entities). The model, by its very nature does not allow new copy cats to appear – because the power of the model resides in its “community interdependence”.

One such example is PayPal – which has a very high level of “community interdependence”… very much higher than a general social network. PayPal has controlled the email payments market for a very long time now and virtually dominates it by 99% plus market share. The copy cats that have recently emerged like ePay or Stormpay – have come in because PayPal does not cater to particular type of merchant sites like “auto-surf ponzi schemes” which fall under a legal issues. Thus these alternative models emerged to cater specifically for this small but significant market. Similarly, as another example, Google Adsense does not allow adult and pornographic website publishers to join. So, other copy cat contextual advertising networks that saw the huge gap and demand sprung up and are thriving.

Other “lock in” models are Scrabulous game on Facebook, online poker sites like PartyPoker and PokerRoom, Ebay, IM Chat, Facebook, Linkedin, Wikipedia (although a open source script is provided to create variants that are encouraged and thrive, but the main site cannot ever be substituted).

Now, onto my breakdown of the evolution of an easily copy-able, low lock-in dot com model …

1. New Dot Com Model is born and hits the webosphere.

2. As power sneezers in the blogosphere and tech magazines start to write about the model and concept – it quickly gains a spike in traffic and a huge initial rush of members and sudden growing community.

3. Forums, Blogs, Online Magazines, Video Sites etc. start to talk about the model and interview the founders.

4. Site gets wiki’d, dugg, stumbled, squidoo’d, tweet’d etc. People on Social Media Sites and Networks start talking about the new dot com idea.

5. As the original site gains publicity and releases APIs and MODS for developers to integrate features easily, the site gains more popularity and a certain amount of “lock in” as developers fixate on their APIs etc.

6. If appropriate the original model launches and affiliate program to help grow the community faster by means of a revenue share program for marketers.

7. As Venture Capital money gets invested, this fuels the fire even more.

8. After about 2 to 4 weeks the copy cats start to arrive – some are exact copies and some are variants and offshoots of the original. This depends on how easy or complex it is to develop the script and database that powers the original model. Many entrepreneurs start to post Request For Proposals to build clones, on project bidding websites like Elance, Workexchange, oDesk etc.

9. As the press reports more on the knock-offs and as these knock-offs start to get traction and traffic, even more variants start to emerge.

10. Variants that cater to a specific community niche based on demographic, geographical region, or psychographic profile – start to appear

11. The original model gains more publicity and if executed correctly captures 70%+ of the market share, while the first handful of knock-offs capture around 20%of the market. The remaining 10% goes to all the smaller knock-offs. In some cases if the knock-off caters to a specific audience that has potential and is large enough – it captures a large market chunk.

12. In some cases, if the original dot com is not able to adapt, or morph to the needs of the market and basically evolve – it faces the great danger of becoming extinct almost overnight. Once such example is Friendster.

13. A whole new marketplace that revolves around products that are offshoots of this dot com model start to appear online. For example – people begin to write “how to make money” reports based on this model and sell them on mini-sites with long landing pages, full of testimonials.

14. At some point sooner or later – a few PHP or ASP scripts appear in the “scripts” marketplace – that allow anyone to purchase a script for say $200 and start their own niche or global site based on the dot com model. Some of these scripts are modified versions of scripts that were developed by service providers on online project bidding sites as work-done-for-hire.

15. Webmaster forums start to discuss the model and there is lot of buzz created around these ready-to-go plug and play scripts. If it is a new dot com model – then a new “category” is created in script directories – listing these sripts.

16. Gradually more scripts appear with variants and more features. The price point for the script gradually goes down. Cheap copies (some illegal too) start to find themselves on Ebay.

17. Programmers are meanwhile making MODS, Skins and add-ons for these scripts and start selling them on relevant forums.

18. One or more Opensource scripts available for free download, start to appear next.

19. The commercial copycat scripts gradually find themselves in the “nulled scripts” sites, torrent sites, file-sharing sites, free download sites. Although, this could mark the starting point of saturation of the model – if the model is revolutionary (for example, Youtube video sharing type sites) – then niche knock off sites will keeps keep emerging – specially when there is good “adsense” revenue potential – and an endless choice of niches and users around which the model could thrive.

For those who are new to the dot com world, I hope this article has been an eye-opener and informative. If you feel I missed out something in my steps of evolution above or disagree on any point, please feel free to comment below.

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cloudsters - June 18, 2008 Reply

Great, succinct narrative! Anything but a techie, but still found it absorbing and informative. Dugg it too.

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