Show me the Money – Web 2.0 Firms not raking in the cash

Many of us who had lived through the first internet bubble of the late 1990’s and early part of 2000 probably weren’t surprised to see this coming – but the news hit last night when the Financial Times published a piece entitled Web 2.0 Fails to produce Cash.

As an observer of this interesting little (or not-so-little) global tech industry that revolves around the “Web 2.0” concept, I’ve long been wondering when the sky would start falling on the notion that you can drive traffic and change online behavior without having a business model that enables you to actually make money.

The article notes:

Many members of the Web 2.0 generation of internet companies have so far produced little in the way of revenue, despite bringing about some significant changes in online behaviour, according to some of the entrepreneurs and financiers behind the movement.

The shortage of revenue among social networks, blogs and other “social media” sites that put user-generated content and communications at their core has persisted despite more than four years of experimentation aimed at turning such sites into money-makers. Together with the US economic downturn and a shortage of initial public offerings, the failure has damped the mood in internet start-up circles.

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Simply put – you can’t sit around and expect to have a buyout coming your way just because you’ve come up with the next great idea. You need to have a way to turn this into a viable business.

I think the great missing story in all of this is that many individuals, myself included, are making a damn fine living by living the Web 2.0 life – but we’re doing it through sustainable business models, and sometimes on a very small scale.