WebNotes launches online annotation service amid heavy competition

Yet another web annotation service is launching today. WebNotes is releasing virtual highlighting and sticky-note tools designed to help people track and annotate online content. The tools let users highlight text on, or stick notes to, web pages. They also let users organize their annotations into files and share those files with others via email or PDF.

But the Cambridge, Mass. company is entering a crowded playing field, and not a particularly healthy one at that. The concept of an annotated web is a good one, because it allows people to better organize and share personalized views of web content. But the web annotation sector has struggled. The first major companies in this space date back to the web 1.0 era, including Third Voice, a startup that buckled in the middle of the dot-com crash in April 2001.

Since then a plethora of other players have emerged including Faves, Diigo, Fleck, ReframeIT and Stickis among many others. All of the companies in the web annotation space have similar business models — frequently they offer a free version geared toward mainstream users and a premium version aimed at enterprise users.

WebNotes seems to be banking on the same business model. According to chief executive Ryan Damico, the company will offer a mainstream-oriented free version of WebNotes, but its core product will be the paid premium version. When I asked how the company plans to differentiate itself from competitors, Damico said it would offer features different from any of its competitors, but he declined to specify what those features would be or when the premium version would be released. He did say in an email that “development will take us a little while” — but I do think the premium version is WebNotes’ only chance to build a profitable business.

Damico said that most web annotation companies are focused on building large communities, with the ultimate goal of being acquired. So far this strategy has largely failed — although Clipmarks was bought by Forbes last year — because annotation startups have found it tough to build communities among such established competitors as social bookmarking platforms Delicious, Digg and Reddit. Delicious, now owned by Yahoo, already provides a platform for storing web page links and attracts a lot of users, as does Facebook, which provides a Sticky Notes application.

Admittedly, many of the social bookmarking platforms compete with web annotation-focused companies only indirectly, but by providing enough related functionality to the mainstream user they often whisk away potential clients.

Even if you disregard the social bookmarking players for a moment, the competition isn’t easy. Direct competitors such as Diigo and Faves boast a few hundred thousand monthly uniques and offer accounts specific to enterprise users. Diigo offers Educator Accounts aimed at academia. Fleck is launching business- and education-specific accounts in the near future as well.

So, I hate to say it, but I don’t see how WebNotes can become a profitable success. You can try it yourself though–300 beta invites are available for VentureBeat readers.

Damico says the idea for WebNotes came from his frustration with web research while a computer science student at the Massachusetts Institutes of Technology (MIT). Originally more of a side project than a startup, Damico and his team of five other MIT alumni secured private funding of an undisclosed amount earlier this year and are now working on the service full-time.

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