Web 2.0, the meltdown, and education

Empty pocketSo when I was in Australia last week, the US was going through some pretty interesting times. Wall Street seemed to be melting down, Congress had to jump in, with lots of finger pointing about what the causes were. Among other things, It made me wonder what the long term consequences will be for schools, and for companies doing business with schools.

Back in July, I wrote this post, Twitter buys Summize – should educators care? In it, I talked about how many Web 2.0 companies will consolidate and/or vanish. If a school or district technology plan is built on these free web apps, what happens when they disappear? And sounding very prescient, I said, “It’s not a matter of if, but when. Are you ready?”

What happened here in the US over the past few weeks just makes that more imminent. Imagine if you are a Web 2.0 company with a free product. Your bottom line is that you need to get bought or get funding (since you aren’t making money.) Or, if you have funding, you need to pay back your investors in some time period. And along the way, you still have to pay your employees and all your bills.

But now, there aren’t going to be a lot of IPOs, you can’t get your credit line extended from the bank, and those potential investors aren’t even returning calls. If you do have investors, they are going to be watching you harder and expecting more. If you were hoping to get bought by some bigger company, well, their stock just dropped and they won’t be going shopping for a while.

So what do you do? You have to make a decision. Make your one year of funding last for three…. or walk away.

If you want to try to skinny it out, you cut expenses to the bone — like marketing, promotions, and staff. You put new features on hold and try to make money on what you’ve already got. And of interest to educators.. you cut your support to areas least likely to make money, particularly small niche markets like schools.

Of course everyone is affected by this financial crisis, not just Web 2.0 companies. School budgets are being cut as well, making it even more tempting to use free tools. There are definitely alternatives such as open source, as Tom Hoffman pointed out in his response to my earlier post. But every alternative has its long and short term costs, and as we are about to find out, there is just no Free Lunch 2.0.

Next, I’ll take a stab at picking the winners. Any early favorites for which favorite edu-tools 2.0 will remain standing? Leave them in the comments and we’ll do some forecasting together.

Sylvia

7 thoughts on “Web 2.0, the meltdown, and education”

  1. Everything costs something — what do you want to invest in? I’d invest in building local capacity around open source software. That’s the most recession-proof strategy.

  2. It is pretty sad right now, so many companies that schools are now using will go under this year. One that I always recommend to teachers is http://www.freewebs.com. I think they may make it through these times. Apparently it started with three brothers so maybe they can ride it out.

  3. Hello, Sylvia,

    Coming late to the conversation here —

    “Free” is a misnomer, and it’s certainly not a business model. Every “free” service requires a time investment to learn how to use it, and most of them capture personal information that can be packaged and sold to data miners/advertising companies, if the “free” service isn’t predicated on an ad-based revenue model.

    As Tom points out, the cost of open source is in training, and maintaining an infrastructure — these are expenses that could be shared among schools/districts — but, when you invest in the people within your organization/school (in the form of professional development and building internal capacity) you help insulate yourself and your tech infrastructure from the vagaries of a market that does little more than pay lip service to the needs of educators, students, and schools.

    Cheers,

    Bill

  4. Hey Bill – It’s never too late to say something smart!

    And this really shines the light on one of the problems in using Web 2.0 in education. Sure, free is fun and cool for a project a single teacher works on. If the specific app you use goes away next year, no harm done, you just adjust. In fact, since you had to do the legwork yourself, and you are probably energized about the stuff, you are a good candidate to find new things and integrate them into your classroom.

    But adoption on a larger scale, where lots of teachers in a school or district learn to use one particular tool, is no longer free. You’ve just spent a lot of time and money in training and deployment on something that you have control over. When it goes away you have to re-spend that money, and your teachers aren’t going to be as happy to experiment.

  5. Glad my NSW DET are circumspect, some say lagging, but they will provide a 1.4 million user network with their own suite of supported web2.0 tools and apps launching in 2009. Not open source or cutting egde gizmos BUT at least all users will learn a common language and have a community to engage with using these tools.

    Sure its still a walled garden, paid for by govt funds BUT it will still be here next year and for the next ten. I feel comfortable that this pace is sufficient.

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