Brian Fuller's blog on the media, marketing and content creation

Web 2.0 meets (creative?) destruction

Posted on | October 20, 2008 | No Comments

Hank Williams hit the nail on the head two weeks ago.
Offering great insight at a time when most folks are starting to realize that something was gravely wrong of late, he wrote:

The truth is that as it relates to generating revenue, Web 2.0 has been a bust…The idea that the raft of social media companies with no revenue model was going to somehow “figure revenue out later” after building up large audiences of free users has, I think been debunked.

Today,, which I really enjoyed using as a tool to write-once, post-many, gave up the ghost. A great interface, it was nevertheless greeted with skepticism from the get-go. Many of the “great ideas” that got venture funding in recent years were features, not businesses.
As Williams points out, bad ideas don’t get better with great execution. Good money chased bizarre ideas in the first bust, and some investors just never learned. (It’s a completely separate post, but it raises the question: Have we run out of good ideas??)
So we’re poised to witness the death rattle of Web 2.0 over the next several months. Who will win the social networking battle? Specialty search? Microblogging? Four hundred ad networks will become….50? 10? Online advertising is still chasing market share against “old media;” cost per click, CPM and banner ads are not going to win the day except in low-margin businesses (as any pure play-blogger who hasn’t had a weekend off in three years because inventory is a demanding mistress). Any number of blog-media empires will suffer as this realization sets in and the companies they were formed to cover vanish like garbled letters we back-space over.

Chilling Effect?
For companies trying to leverage new and social media, it’ll be an even more confusing period than the past two years has been. Many of them have finally–reluctantly–started to embrace media change, and to watch go through wrenching change will be tough. Some will flee back to the old media, only to find no one’s home. Others will feel embittered for years–as if someone’s played a cruel trick on their careers. Every time one a new media consultant knocks on their door, they’re likely to answer it with a shotgun in hand.
At the end of the day, they just want to communicate effectively–to do their jobs–and that’s not much to ask really, although media (old and new) have made that really difficult this decade.
Change is good and it takes time. The Information Revolution–like the Industrial Revolution–didn’t begin and end overnight. It took decades.
And sometimes, as part of that, you have to knock down the old structures and let them crash in a heap of rubble and a cloud of dust.

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No Responses to “Web 2.0 meets (creative?) destruction”

  1. Loring Wirbel
    October 21st, 2008 @ 9:11 am

    The problem with starting with a free model is it turns everyone desperate and foolish in its wake. Case in point: when Facebook and became a de facto free way to look up old classmates, and immediately began using unethical and spam-like ways to woo people to their paid services.

    We can see elements of this in the way Zuckerberg initially promoted Beacon for Facebook. Any fool could have told the promoters of social networks that, as soon as they developed a strategy for monetization, users would get wise and migrate to something else. Now, MySpace can generate a revenue stream based on music and movie promotion, but in so doing it becomes a site for media promotion, not a true social network. And that’s OK, it’s still valuable. But most social networks hit their points of annoyance months ago, and the vast bulk of Web 2.0 applications constitute a big steaming pile of putrid whatever. But at least it’s free!

  2. Greeley's Ghost
    October 21st, 2008 @ 9:33 am

    There’s a lot of early chatter that the era of free is dead or dying. I get why people would say that, but i don’t see how you put that toothpaste back in the tube.

  3. Frank
    October 21st, 2008 @ 10:07 am

    Brian, you have described the new media equivalent of Gresham’s Law.
    Instead of bad money driving out good money, it’s the bad business model (free) driving out the good models (something paid for).
    Free will always be around, so we have to get used to it. Some idiot is always willing to mortgage his/her company’s future for a few months or years of unpaid glory.
    The only successful online business models so far have been direct marketing (Amazon, eBay) and advertising – which is pathetic because advertising sucks in so many ways.

  4. Ry Schwark
    October 21st, 2008 @ 10:44 am

    Social media suffer the chicken and egg problem.

    To be valuable, you need a big audience. To be profitable you need them to pay in some way.

    If I make it free, I get the audience but no revenue. If I make them pay, I get no audience.

    Which is why traditional media approaches to the problem still work best. Get the audience for free, then sell them to somebody else: advertising.

    But eyeballs are a commodity business. I can buy them a million places. Why should I pay much for yours?

    In the end, I think Hank is right. A cool ‘idea’ != a viable business model

  5. wretch
    October 23rd, 2008 @ 3:57 pm

    We’re overly optimistic if we confine the discussion to the commercial realm.

    Any bored and ambitious college student (college? Hell — high school student) could start a social networking site and be happy to do it for free.

    I think Ry is right — TV is a better analogy for the web than newspapers. It’s an eyeballs biz.


  6. Loring Wirbel
    October 24th, 2008 @ 4:26 pm

    As a Deadhead, you’re probably in mourning over Merle – my condolences.

  7. Greeley's Ghost
    October 29th, 2008 @ 9:09 pm

    Loring, I’m mourning over a lot of things these days, but, yes Merle’s one of them! I’m trying to balance on that razor’s edge between embracing change and just railing wildly at anything that comes within arm’s length!

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