I’ve been thinking about this for a long time and only recently found a comment that made me really want to expound on my opinion of Web 2.0 as a business concept. This comment was made on FriendFeed in response to a post by Veronica Belmont pointing out McCain’s comment about “hating bloggers”:
“A great divide in contemporary American culture: crony capitalists vs. creative capitalists. Crony capitalists hate creative capitalists and feel threatened by them. That’s the subtext here if you dig deeply. The Bush 43 administration (of which McCain is a part) is the last angry gasp of a particular class of crony capitalists who want to annihilate everything that they can’t understand or control. The Internet is full-throttle creative capitalism — it drives these people nuts. - Sean McBride
Putting aside the political commentary here (which I have very little interest in), I think the idea of “creative capitalism” is seriously flawed. Web 2.0 companies have this idea that if they build something, they’ll be able to live off of VC and advertising money indefinitely. Would Twitter continue to survive if it weren’t for the recent VC investment that is now allowing them to expand their architecture? Are other Web 2.0 properties such as Digg, Revision3, Mahalo and the like even turning a profit? Is there any prospect of them turning a profit in the next several years? I doubt it.
There is going to come a point when the Web 2.0 market matures. VCs will wisen up and realize that they aren’t going to get the kind of ROI they once did for Web 2.0 companies. VC money will become harder to get and unprofitable Web 2.0 companies will either die off or get gobbled up. The weakness of the dollar and our struggling economy are causing all sectors of business to tighten up their purse strings and evaluate much more carefully any spending they do.
I’m not saying that blogging will ever go away. But the idea that “creative capitalism” is a viable, long-term economic pattern is simply niave. This is Web Bubble 2.0, plain and simple.
Sidenote: I should add that I enjoy many of the Web 2.0 sites just as much as the next person. I just don’t expect them to be around long-term unless they make changes to become profitable.
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