Is Web 2.0 actually a vicious circle?

August 24, 2006 — 2 Comments

Steve Rubel makes a very, very brilliant observation on Web 2.0 today…

Quietly, an entire Web 2.0 economy has blossomed. The Web sites and blogs that cover Web 2.0 – sites that I really love – are largely supported by ads from startups that also are hoping to capitalize in the rising interest in online advertising. This creates a vicious cycle that’s unhealthy for the earning potential of bloggers who cover Web 2.0.

Once again I turn to history as my guide. Back in 2001 Yahoo faced a similar problem. It was too dependent on dot-com advertisers…what’s not different is that startups advertising on startups spells trouble. You can’t sustain momentum. If the economy hits a speed bump it will upset the apple cart enough to cause the Web 2.0 advertising economy to sink. And while it won’t spell the demise of these popular blogs, it might mean these bloggers will need to return to their day jobs.

History is a guide, and with a pile of money going into Web 2.0 reporting blogs it really puts the gamble into venture capital funding, doesn’t it.

Congrats to Steve though for being the first to observe this, it seems obvious…indeed one of those thinks that makes you scratch your head and wonder why didn’t I notice this and articulate it in a blog post..and yet I think Steve is the first with this as a posted observation.

Tags: ,