Another Quiet Day

Web 2.0 as a Spectator Bloodsport

I've been reading Susan Kuchinskas' weblog The 360 over the last few days. Just a bit every day. Add to that the ad-oriented weblogs, magazines and web sites I've been following and a picture is forming.

It's not a grand picture of glorious palaces and riches for all, I'm afraid.

More along the lines of "oh, fuck. Not again."

What seems to be happening is that ad inventory, the places and publications that offer advertising space is growing at an explosive rate.

Weblogs and web sites are being born every minute.

New technologies make it easier and cheaper for the dedicated to start new 'old media' ventures.

Podcasts and vlogs have opened up the audio and video ad space.

The cost per thousand impressions (CPM in the industry, apparently) for video is pretty high at the moment but can only go down as more and more web sites add regular video features to their arsenal.

The consequence is clear. Where supply outpaces demand, prices will fall.

When prices fall, so will the ad revenue.

Or more importantly, the margins for ad-oriented company will all but disappear, turning what is now a lucrative industry into a bloody and ruthless commodity industry.

What will happen to all of the "pro" weblogs and "web 2.0" app services that base their entire revenue model on ads, I do not know.

Although I do know that I sure wouldn't want to be in their place in a few years.

Umair Haque talks on his weblog about Web 2.0 and Media 2.0 being a long boom with a harsh and ongoing shakeout where badly thought out startups and publications will be constantly winnowed out.

I suspect that he is right.

Baldur Bjarnason – 23/8/06