Making Sense of the Widget Platform Landscape

I’ve been obsessing a lot about the widget platforms recently (Widgetbox, Musestorm, Snipperoo, Clearspring), and how they might make money. 

In order to get my brain around the business model question, I’ve taken a shot at listing out the various services that these guys are performing with an emphasis on the things that either publishers or end users might be willing to pay for.

For those with the endurance to read all the way through this post, there will be a handy little chart that will attempt to show who is offering what services.

For now, I’m going to focus just on the widget platforms like Widgetbox, MuseStorm, ClearSpring, and Snipperoo.  I’ll save the start pages for another day.

The core services being provided by the widget platforms seem to be:

RSS Feed to Flash Widget Conversion (feed by feed)

This is exactly what it sounds like – an automated way for small publishers to convert their RSS feeds into a snazzy Flash widget.  The two best examples of this are Musestorm and Widgetbox Blidgets, which both offer automated tools that can convert any RSS feed into a customizable widget.

This doesn’t have much potential as a revenue model by itself, as a number of Flash RSS Reader widgets exist, all of which are free.

Content to Flash Widget Conversion (enterprise)

I know for a fact that several of these widget platforms are being inundated with requests from big companies to help them widgetize their content.  A great example of this is how Clearspring recently helped the NBA widgetize player profiles for each of the league’s 300+ pro basketball players.

While big, old school companies can be nice clients because of their marketing budgets, my sense is that none of the widget platforms want to get too hooked on this type of  one-off revenue model.  Unless a widget platform is going to see attribution or be allowed to host the widget configuration tool, I just can’t see these venture funded businesses getting too excited about becoming consulting shops.

Enterprise level widget conversion doesn’t have to be of the hand-holding, consulting business type, however.  Media companies with large amounts of widgetizable content are also looking for automated ways to convert this content into feeds, maximize its potential uptake, and track the results.  More on this to follow.

Distribution Facilitation Tools

Distribution facilitation, for lack of a better term, is about reducing the obstacles that stand between your widgets and their uptake.  For example, there are tools that make it easier for the widget consumer to embed your widget in the community platform of their choice (TypePad, MySpace, Netvibes, etc.).  Widget publishers have the choice between building these tools themselves, and letting a service like Musestorm or Widgetbox handle it for them.  These tools can be a hassle to build, and in some cases, require a business development relationship with the community platform.

Along with these embed tools, I would also include the provision of a high quality widget configuration tool as a factor in driving distribution.  It makes sense to me that the better the customization options that you offer your widget consumers, the higher your uptake will be.  Once again, the widget publisher has to make the build or outsource decision.

So would widget publishers be willing to pay to improve their rate of widget uptake?  As a widget publisher with a small development team and a project list a mile long, I would say yes – as long as it was on a pay for performance basis, and I was able to secure a few “have to have” attributes such as widget to widget distribution, and a crawlable backlink.  I don’t see any reason for my developers to try and recreate the good work that has been done by Widgetbox and Musestorm in building tools that make it easier for end users to consume my company’s widgets.

Widget Analytics

Widget analytics pose some unique issues not dealt with by major site and blog analytics packages.  Specifically, knowing where your widgets are showing up is important information for getting a complete view of how folks are consuming your widgets.

That being said, I’m not sure if basic page view and location data will be enough to incent widget publishers to pay.  Through services like Google Analytics and Statcounter, publishers are used to getting their basic stats for free.  The door may be open for more sophisticated stats to be monetizable, or for enterprise level stats capturing thousands of widgets serving millions of impressions.

Widget Aggregation / Directories

Another piece of the distribution puzzle is the active promotion of your widget via a directory.  Just as Amazon has built an incredibly successful destination site where consumers can take advantage of neat tools like the Amazon recommendation engine and user reviews, companies like Widgetbox and Snipperoo hope to build similar destination sites for users to find widgets.

For the directory driven business model to work, a directory would have to attract a large user base.  With a large user base, business models such as advertising and featured listings could be possible – however, to date none of the widget directories are showing signs of breaking out.

A second potential revenue model associated with widget aggregation could be the sale of premium widgets, with the widget platform sharing revenue with the widget publisher.  There are examples in the gaming and social networking verticals of sites that have been able to sell digital goods to their user bases – World of Warcraft and Habbo Hotel come to mind.  However, these digital goods have been sold in the context of a larger experience, and not in a standalone marketplace.

I remain skeptical that widgets will ever be consumed via a centralized, Amazon-like service.  So far, at least, widget consumers have looked to each other for widget recommendations, or as Tim Post says, have consumed them in the wild.

Widget Panels / Containers

This is a consumer facing service offered by both Snipperoo and Widgetbox that allows consumers of widgets to manage their widgets on their blog or personal site via a centralized control panel.  The benefit of this service is that once the consumer has installed a widget container on their blog, they’ll never have to wade through HTML again.

It’s unclear to me that enough consumers are looking for this type of service to make it a significant market.  Even if I’m wrong about this and widget management panels take off, it seems unlikely to me that consumers would pay for this service.

Summary

So there we have it.  Of the so called widget platforms, we have one company (Snipperoo) that is focused entirely on the widget consumer, two companies (Musestorm and Clearspring) that are focused (almost) entirely on the widget publisher, and one company (Widgetbox) that is providing services to both widget publishers and consumers.

At this early stage of the game, I would rather be facing the publisher than the consumer.  Both the widget directory model and the widget container value proposition seem suspect to me in terms of their ability to attract a large audience.  A consumer emphasis also places you squarely in the path of the well funded start pages like Netvibes and Pageflakes, who are basically providing the same services but in the context of a consumer behavior with more proven demand.

Conversely, facing the publisher allows these companies to cherry pick the occasional large enterprise client and their associated marketing budgets, and perhaps piggy back some exposure from an exceptionally successful widget.  There may even be a long term agency play for the right company that is willing to do a lot of handholding with the big consumer brand companies.

It seems to me that the real winning formula is going to look something like this: build and host an entirely automated platform that widgetizes content, removes the barriers to widget uptake, and provides useful statistics about widget usage.  Charge publishers on a CPM basis so that only those clients that are seeing widget uptake have to pay.  If your platform is good enough, there’s a good chance that one of your stable of widgets that you manage will blow up, providing you exposure and case studies that you can be used to sign up other publishers.

Whether an actual advertising network, affiliate, or ecommerce model will ever emerge for widgets remains to be seen.  If it does, the widget platforms with large installed bases could find themselves in a position to earn a cut of whatever revenue is earned – not unlike Google AdSense.  While the details of how this might play out remain blurry (will host sites allow it?  How many ways will revenue have to be shared?), you have to think that there is value in building up a large footprint.

Anyway, this post has gone on way too long already.  Here’s my best estimate at the services that are available through each of the four players in this space.

Comments

[Ori (MuseStorm)]

Great post Lawrence.

I agree with almost everything you've written, with the exception of 'Content to Flash Widget Conversion' where our experience is different (more to come...)

[Danny Espinoza]

Bingo. I believe your winning formula is right on the mark. The key is uptake, and with competing deployment platforms (start pages, desktop environments, blogs, etc.) this isn't going to be easy.

[Ivan Pope]

"At this early stage of the game, I would rather be facing the publisher than the consumer."
For sure, it's always easier to build a company on corporate fees - but that's the agency model and ends up being fiercely competitive with slim margins.

"Both the widget directory model and the widget container value proposition seem suspect to me in terms of their ability to attract a large audience."

Well, let's give it a bit of time and find out. We are playing to existing large audiences, i.e. people who consume widgets for their own choice of destination, so there is a good chance for the right product.

"A consumer emphasis also places you squarely in the path of the well funded start pages like Netvibes and Pageflakes, who are basically providing the same services but in the context of a consumer behavior with more proven demand."
I don't agree that there is 'more proven demand' for start pages. Start pages are a very recent phenomenom and, while sexy, provide limited potential. We believe that the combination of widgets from the free market and a free market of destinations has much more potential. There is another issue: start pages face inwards, most web sites face outwards. Different marketplaces. And 'well funded' just means funded, it isn't any sort of magic in its own right.

[Ed Anuff]

Lawrence,

First of all, thanks for recognizing in your chart of widget services that Widgetbox is the only vendor that has addressed the full range of capabilities you've identified. We think that these are the basic foundation that you need in order to provide a viable platform in this space, and in fact, we think a lot more needs to be done.

Regarding the consumer-facing services, from our conversations with our over a hundred certified widget providers (the ones who take advantage of our premium services), we've seen that there is a very strong desire for the capabilities to market, merchandise, and cross-promote widgets, which Widgetbox is alone in being able to offer by virtue of our consumer-facing Widget Marketplace services. We do think that the Amazon or iTunes model is essential for distributing widgets, we don't agree that this is separate from the idea of "widgets found in the wild" - there is no successful similar model in any online product promotion that doesn't use viral endpoints in conjunction with a central catalog - just try to purchase a single book or song from a blog link without having Amazon or iTunes trying to promote a dozen other titles.

As you point out, the business models are still evolving, but we're able to leverage the most built-out platform in the business to addresses the opportunities that emerge and a healthy user base of both publishers and consumers to grow from.

Ed Anuff
CEO, Widgetbox

[lawrence]

Ivan, on Septermber 28 of 2006 I said this (about widgetbox):

"So the task at hand seems pretty straightforward; 1) put together the world’s best widget directory to attract developers and publishers alike; 2) blend the directory experience into the platform experience so that using one is using the other; and 3) wire the Widgetbox platform to the big blog aggregators to enable easy implementation."

Clearly, my position has changed significantly on what a winning formula might look like in just a few short months. As Ed says, iTunes and Amazon are two pretty compelling success stories of platforms that face the consumer.

One of the benefits of being a blogger is that you can make sweeping generalizations on things without actually having to bet the farm :)

My point about start pages is that the long time existence of MyYahoo! makes start pages a bit less of a new behavior for the consumer than centralized widget marketplaces.

[Ivan Pope]

Lawrence, I think one thing we can all admit is that the situation is very very complex and none of us know how it will pan out. It is certainly exciting though. Keep up the analysis.

[Hooman Radfar]

Great post. You have sparked an interesting and worthwhile conversation.

I guess I will join the club - albeit a bit late - and put in my two cents. :)

You are correct, Clearspring's flagship services our geared to benefit the widget creator. Although we think everyone is doing fantastic things with their respective efforts, that is what we have decided to focus on first.

As many folks have alluded to, however, this is a new space. Models are still emerging. Everyone in the space will make huge changes over time - that is the nature of an early market. We have some ideas about what will happen next though, and are planning accordingly.

As an aside, we do offer a variety of distribution tools. So you might want to update the trusty chart you are working on.

Thanks for the great thinking. Cheers.

[lawrence]

Hooman, are you guys coming out with an automated, public platform any time soon where regular joes (like me) and can try out your cool tools :) ?

[Lorna Li]

Really informative post! I am learning so much about the art of widget development & distribution. TBH, it sure doesn't seem easy!

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Great post Lawrence. I agree with almost everything you've written, with the exception of 'Flash Widget Content Conversion, where our experience is different.

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I agree with almost everything you've written, with the exception of 'Flash Widget Content Conversion, where our experience is different.

[Cartuse]

I think the winning formula is right on the mark. The key is the recruitment, competition and deployment platforms (home pages, desktop environments, blogs, etc) this will not be easy.

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Old school companies can be nice because clients marketing budgets, my feeling is that none of the widget platforms want to get too hooked on this type of revenue model once.

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Great post Lawrence, I am in 100% agreement

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Widgets are nice for smaller companies that don;t have a big budget and can focus on bringing smaller niche products to the market.

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