Business Models of the Web 2.0 : Advertising or the Tale of Two Stories

Web 2.0 services have experienced a very strong growth in the last 4 years, and now account for a large part of the global internet audience. The development of these services comes with a deep transformation in Web uses which may prefigure the future of media in an ultrabroadband world. The perennial nature of Web 2.0 services crucially relies on their capability to build profitable business models. Today, advertising is the main source of revenue for Web 2.0 sites; however advertising revenues are weak and disappointing, especially related to their audience. The aim of this paper is to provide an economic understanding of the situation and to investigate the strategies of economic players (site managers, ad networks and ad servers) in order to improve advertising revenues on Web 2.0 sites. We present two different stories about the effect of internet on advertising, specific problems encountered on Web 2.0 sites and effective ways to monetize Web 2.0 audiences. Each story builds upon a different theoretical framework: the economic analysis of advertising and the socio-economic approach to worlds of production