There are better user interfaces than Windows 95. There are better fuels than gasoline. There are better hamburgers than MacDonald's. Why aren't these better products winning out? If we make Suite101.com the best guide to the web, will it be successful?
Here is a good overview of the mechanism of competition, presented as a slide show with a cute "slide projector" mechanism. Product differentiation and the characteristics of the market you're trying to penetrate are key influences.
What this means for Suite101.com is that trying to become the best "Guide to the Web" in its traditional form is probably not such a hot idea. The only thing this market has going for it is that it is growing rapidly. That's important but negative factors are that the market is already saturated and that the participants are losing piles of money. The latest on Yahoo is that they have to spend three dollars to make two. It seems to be clear that "hits" do not generate enough revenue to cover the cost of getting the "hit" and the trend is negative. Not a friendly place for a small start-up with limited financing.
The business of "virtual communities" however is wide open. It is at the stage where "web guides" were when Yahoo started and Suite101.com could become the Yahoo of virtual communities. The thinking is that, where a "hit" doesn't generate enough revenue to cover costs, a "member" can. If you believe that, and it is plausible, then the market potential of this undeveloped business area is enormous and ideally suited to a small start-up with limited financial resources. That's why we have to have membership and why we need members more than visitors. With a lot of members, we have a competitive product - with a lot of visitors, we don't.
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