You can't build a cool web app these days without some blogger asking, 'But what about your business model?'  And so I ask this question about Riya.

We've all learned the lessons of the dot-com with most companies having had no real business model, usually because of a poorly defined market segment (think LiveSquidinaBox.com)  Today, the business model de rigeur would seem to be 1. build a cool app, 2. get bought by Yahoo, Microsoft or Google.

And so for Riya?  Currently, there is no charge associated with using Riya and there is no advertising on the site.  It is currently still in Beta.  From what I have read about Riya, I get the impression that they expect an eventual business model to come from advertising.

My fear is that Riya could become the Tivo of web apps.  Those who use it love it, everyone else asks,  'what's so great about it? it sounds like a VCR etc. etc.'

There is much discussion in the blogosphere around the "new" marketing and the fact that if people love a product it has a strong chance to become widely adopted through viral marketing.  But the reality is that strong viral marketing must be combined with a good business model.  Tivo never really got its business model quite right. 

So Riya, please get it right.  My view is that the ideal business model for Riya is not advertising but rather to licence the technology.  Clearly team Riya is good at image recognition.  Create a brand around being the best (models to look at: Dolby Noise Reduction, MPEG-4), licence it in private agreements and get it out there with all the photos sites, blogging tools and maybe even Google images search.  There are so many businesses that I can think of that are now taking large numbers of digital images (professional photographers, media, archivists and the list only goes on). I believe they would pay for a technology that reliably labels and tags their photos. 

Don't (whatever you do) get bought out by Google, Microsoft or Yahoo.  Why?  Because network externalities affect the usefulness of this technology.  Its only when many people are teaching Riya that it becomes truly useful.

Riya appears to be the first company to build a strong brand around image recognition technology.  But people leave companies, they take  technology with them,  people talk, write papers and eventually being able to do what Riya does will enter into the technology collective.  The biggest advantage that Riya has now is being first and in this case, getting big fast is important. 

Riya must start to build the most significant user base so that it becomes the tool of choice for image recognition.  It can build the business model from working with Google, Yahoo, Microsoft and others.