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Formats are the Internet's Killer App
Formats are the internet’s killer app. Yet, they get little attention and even less respect.
Formats create more value online than content. Yet, content gets all the press.
There’s already a mountain of content available online – most of it free. We don’t need more content. We need better formats.
Formats have been around for a long time, packaging and organizing ‘content’ to make it worth a lot more.
Top 40 radio is a format. It takes about 40 songs that are ‘worth’ 99 cents each at iTunes and packages them so that can be worth millions in advertising. The Top 40 format adds millions in value.
We can see the same format power at work for Amazon, eBay, Zappos, YouTube, and Facebook . Formats have added billions in value online.
Amazon is a format. It doesn’t create content – it formats or packages it.
Amazon made a fortune because it formatted the department store online.
It formatted (organized) its store as a simple, one-stop shopping experience - with a series of ‘departments’ ranging from books and electronics to garden tools into -just as Sears had done in the physical world 40 years earlier.
And, Amazon made millions without manufacturing any ‘content’
Even eBay is a format. They are worth billions because they formatted the flea market. eBay simply created the packaging that sold someone else’s ‘content’.
iTunes formatted the online music store. And, the iPod re-formatted the record player.
Zappos formatted the shoe store. They don’t make shoes. They format the experience of the world’s best shoe store to appeal to shoe junkies. And, it works.
Or, consider Facebook. It formatted the reunion. It hasn’t earned much profit but it could sell today for billions of dollars even though there is no clear business model. That’s the power of formats.
The same is true about YouTube. It formatted the ‘home’ movie, never made much money and got sold to Google for over $1 billion.
Not surprisingly, the biggest online business of all, Google, makes most of its money from formatting, not from content.
Google makes enormous profits by formatting the ‘library’ experience for users and then selling ‘knowledge’ about user interests to advertisers. That’s the power of formats.
One could even make the case that the Mac operating system (OSX) and Windows are both a form of format. They organize the way we can use a computer.
If you make that case, then the ‘format’ that jumpstarted the world wide web – Netscape, is the granddaddy of them all. And, it sold for billions of dollars.
That’s why we’re bullish on formats and formatting. Because, there’s already a staggering amount of content available online – most of it free – and, most of it is not formatted well, if at all.
We see big growth opportunities for companies that get better at formatting. And, lost opportunities for those who don’t.
posted by John Parikhal @ Monday, June 08, 2009,
