Johanne Ernst is a builder of Identity technologies (and one of the clearest thoughtful thinkers about identity technologies and markets. He just posted a great post about business models in the identity space. I know he has at various times tried raise money as an entrepruner in this space – so he has thought a lot about the business models.

For those of you who don’t know Johannes he developed Light-Weight Identity (LID) a URL based ID system at the same time Brad Fitzpatrick did at Live Journal and then participated in merging it all together into YADIS discovery which became woven together with OpenIDv1, XRI/i-names  and sxip to become OpenIDv2. He also was the first drawer of the identity triangle (OpenID, SAML, InfoCards) which evolved into the Venn of Identity.

Many people have ideas for value-added services that could be sold once sufficiently many users used internet identities at enough sites. The trouble is that the transaction volume for OpenID (or any other identity technology on the internet) is still far too low to make this viable.

The mot important sentence is this one – Let’s not confuse being majorly annoyed how long this is all taking (speaking about myself here) with something being fundamentally wrong (because there isn’t).

I take heart with what he has to say especially because he addresses it to a big part of what I do – organize (un)conferences to continue momentum for the field.

From his post:

Value-added services:
Many people have ideas for value-added services that could be sold once sufficiently many users used internet identities at enough sites. The trouble is that the transaction volume for OpenID (or any other identity technology on the internet) is still far too low to make this viable.

So the verdict here is: perhaps in the future.   

So what’s an analyst, or conference organizer, or entrepreneur, or venture capitalist to do?

My take: Hang in there, keep the burn rate low, make no major moves, would be my advice. (Believe it or not, sometimes I’m being asked about my advice on this.) All the signs are pointing in the right direction, the latest being Google’s major OpenID push. Let’s not confuse being majorly annoyed how long this is all taking (speaking about myself here) with something being fundamentally wrong (because there isn’t).

Sooner or later, at least the value-added services opportunity will emerge. Perhaps others. But so far it has not yet.