I was going to post an exercise diagramming the value chains and business models of:
1. A traditional retailer selling T-shirts
2. A T-shirt retail store selling T-shirts and iron-on decals
3. A college campus bookstore selling licensed college T-shirts
4. An online DIY crowdsourcing T-shirt
but then I got caught up in reading some of 150 comments posted on the online review of my book at Slashdot.org. Check out the 10 out of 10 rating at www.slashdot.org.
I found one of the comments had an even better example using the music industry and last.fm...So I cut and pasted it here below...
(Comment posted by msimm(580077) (#24123991):
Book aside (I didn't RTFA) and glossing over the Web 2.0 jargon the important change I see isn't the social features you seem to be mocking. That's just an easy facet to focus on.
What's news is websites have become services.
Mull that over for a second if you want.
Now days there are 2 kinds of websites: destinations and services.
A destinations major draw is it's content and it relies on this content to draw visitors and to thereby grow its site. A service will also have content, but like the name suggests a service also provides it's visitors with services and it relies on its content *and* the usefulness of its services to grow the site.
Now if we extrapolate that for a second we can create two imaginary retailers: musicshop01.com and musicshop02.com
Musicshop01.com is a good old music retailer. They sell cds, lps and t-shirts and have a great selection. People love to go to musicshop01.com and find the latest music.
Musicshop02.com just opened and they have a similar selection, but the owners a bit younger with some computer experience and a few programming buddies. People can browse catalogs and lists just like they could at musicshop01.com but they start to notice a few other features: they can create tags, add comments, create and manage lists, add ratings or reviews, view personal history, suggestions, search these items, add friends and send and receive recommendations. The website owner is happy because the cost of this user-generated content is very low (increased overhead) and the users are happy because the peer-generated content provides additional information which can prove useful.
Over time users realize that the services provided by musicshop02.com are convenient and can save them time and can help them find products that they might not find otherwise.
At the same time growth at musicshop01.com has been flat and is now beginning to drop as users become increasingly familiar with the services available at musicshop02.com.
Welcome to the social revolution.