Consumer Web is Binary
Below I’ve listed the #1 and #2 companies in a sampling of consumer web markets.
No #2 – Myspace effectively died. Google+ has been laughable.
No #2 – Posterous acquired & shut down (can count WordPress though blogging / microblogging had different origins and compete indirectly).
No #2 – FB Poke failed
Bing (burning hundreds of millions a year, bought Yahoo audience to be #2)
No #2 though video will surely play a role for Instagram and it’s early… But there’s no one else in the running (Viddy, Socialcam, etc)
No independent #2 left out of dozens of copycats (however FB’s succeeding in local and Yelp has shifted from web to mobile during time 4sq has grown up)
No #2, though in theory Lyft and Sidecar are pursuing same market in different way (rideshare vs dedicated drivers)
Rdio is a distant #2
No#2, even the sum of the long tail is almost insignificant, which is crazy.
All these demonstrate a very provocative and clear drop off between #1 and everybody else – consumer web really does hold as winner-take-all markets. In each of these markets there were dozens of well-funded (sometimes hundreds) competitors.
The main rationale is undoubtedly network effects and demand-side economies of scale – a connected user benefits more when others are on the service.
Mobile is certainly the biggest inflection point for new upstarts to dethrone the #’1’s (and create new markets) and we are seeing it happen in cases. But interestingly, these mobile-first markets also seem to be growing into winner-take-all.