Scribd: Cool feature or actual business?

I know it’s kind of quaint to wonder about business models with Web 2.0 companies, and a number of people (including Fred Wilson) have argued that startups shouldn’t worry about monetization until they get some scale, but I have to say that I felt that old twinge of concern when I first saw Scribd, which just re-launched with a new format and features, including its own Flash-based document viewer. I think the service is great, but the business angle kind of makes me wonder.

There’s no question that Scribd is pretty cool — especially when you consider that it was created by a couple of twentysomethings through the Y Combinator startup program run by programmer and VC Paul Graham. There’s a video of co-founder Trip Adler here, in which he looks like the next-door neighbour’s kid, the one you get to look after the cats and maybe mow the lawn while you’re away.

Trip and his team are clearly smart as well, since they ditched Adobe’s Flashpaper, which they were using initially, in favour of their own Flash viewer called iPaper — which appears to be faster, has a smaller footprint and has a bunch of custom features. It’s pretty cool to be able to view what looks like a PDF document with images and everything, in an embedded Flash widget. And it’s easy to implement on your site so that links to Word documents or PDFs are autoconverted.

All that said though, I just can’t see how Scribd makes money, even though the service does include the ability to put ads on document pages. I don’t see that being a huge revenue generator (although I could be wrong). I suppose there could be tiers of access to documents or sharing features, but I have no idea what those might be, or whether people would actually pay for them. Maybe Scribd could get bought by Google — I think Google Docs could use a few of those cool features.

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