Feb

13

Reality Check for Web 2.0

February 13, 2007 |

CNet’s Erica Ogg has written a very thought provoking article on the state of Web 2.0 companies. She compares the small start-ups to the companies selling shovels to gold miners (the sellers made more money than the miners).

But if anything, the article is a reminder that even though the VC community would like to think that things are so different today when compared to the late 90s, there are still too many companies out there with little if any idea of how to monetize their products.

The answer one hears most often, of course, is advertising. But as I have said before, that can’t be the end-all solution. Here is a snippet from the as the Download Squad put it:

As online ad spending has increased to $16.4 billion, (a more than 40 percent increase between 2004 and 2006, according to eMarketer) so too has the number of products vying for those online ad dollars. Though “the pot may have gone up by 10 times,” he [that is Matt McIiwain of Madrona Ventures] said, “the (number of) people going after that pot went up 100 times.”

So according to this guy, the pot is already thinning out. And I still stand by my prediction that we will see a major backlash against advertising in the very near future. There just has to be because sooner or later the barrage of ads we encounter every day has to lead to a negative reaction from consumers. I don’t know what the other options would be, but I would love to see the stats for how many users use Adblock with their Firefox browser.


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