Duncan Riley> Talk of an internet bubble (v 2.0) seems to be all the rage at the moment, but as I’ve never been one to stuff around with words, here’s my response to it:
Yes, I know a lot of people are going to argue with me on this one, accuse me of having a conflict of interest being in the game etc, etc.. but I think talk of a bubble has the same problem as some sections of the blogosphere, it’s all hype, but in this case its negative hype.
So let me play amateur historian and take a walk back down memory lane.
Bubble 1.0 was fuelled by copious amounts of venture capital funding into companies that never had a chance of making any money, and never did.
Bubble 2.0 (in particular with blogging related firms) sees investment money put into, or in recent cases out right purchases, of content and service providers who are, for the most part profitable already (and this is the key!)
Bubble 1.0 came at a time where internet advertising was still regarded as a niche field
Bubble 2.0 is a market place in which internet advertising is already bigger than other forms of advertising and continues to grow as US consumers move from “mainstream” media to the internet in growing numbers (and more so amongst key demographics) as their key form of entertainment
Bubble 1.0 was based on shallow, traditional pushes of business to consumer marketing models (B2C)
Bubble 2.0 is content and interactive based (C2B2C) (sorry, I’m not using the words “Web 2.0”, because I don’t like sounding like a wanker…call it relationship building but Web 2.0 is over-hyped and half of the reason this bubble talk exists in the first place)
Getting the picture? the fundamentals are different. Ive spoken to advertising agencies who tell me that at the moment they just cant find enough quality sites to put ads on (when they say quality they mean decent traffic). I’ve spoken to blog owners who are on the verge of quitting their day jobs as they see their revenues continue to increase(and I’m about 3-4 months away), and of course I know people who do nothing that blog for a living.
Is this a bubble? Why? people are creating content that is supporting advertising in a marketplace that is quickly growing in stature as the preferred media choice for entertainment and information amongst consumers not only in America but across most of the world as well. In 1998 I had a 56k internet connect, today I have a 512kps connection and early next year I’ll have a 2mpbs connection. I already listen to internet radio in preference to local radio, and watch Mania TV and CN8 through the internet under Windows MCE….and I live in Country Western Australia, about the furthest point on the planet from just about everywhere, and guess what, I’m no longer the exception, I’m getting pretty close to being part of the rule.
As long as we don’t see a return to the gross distortion of bubble 1.0, which for my liking was essentially like playing craps at a Las Vegas Casino where you were on a winning streak for the first 30 minutes before you lose it all, there will not be a bubble 2.0, and there certainly isn’t one now. Will some companies go bust? they will, and they do, not only online but offline as well, its called bad management.
Remember folks, the people in the Radio industry regarded Television as a fad, an overhyped idea that would go away. It didn’t.