Social Site Bubble
We’ve all heard about the dot com bubble. It generated millions of dollars for young people who spent it all on luxury items thinking that money will continue to fall in their lap. Well that bubble burst, and people panicked, lost jobs and struggled ever since.
We’re facing a new type of bubble, however this one is the other extreme. Now sites generate nothing, everything is completely free to the user. If it weren’t for the cheap hosting and giveaway domains, these “businesses” would’ve been bankrupt years ago. Every once and a while a new one pops up with some clever spin on an idea with only one business strategy. Hope.
These startup companies that push out a savvy web 2.0 site really have no business plan other than to capitalize on an idea, then get bought out for quick payment. I mean just take a look at the CEOs of Myspace and Facebook, they’re richer than most people in their 20s – early 30s. Since then there has been hundreds upon hundreds of social networking sites that, for the most part, focus on a niche. This is fine, but there’s always a limit as to how many people can join these types of sites regularly.
However, unlike the dot com bubble, there isn’t much money floating around (if at all). So the bubble will not be as dramatic. Some networking sites will come and go, others will have to modify their business plan if they want to stay around.
One site in particular has people asking the question, “How do they stay in business”? (By business, we mean exist). This site known as Twitter, gives the user to tell the entire world in less than 100 characters about what they are doing at the exact moment, so that others can either relate or become interested in their otherwise meaningless lifestyle. (Unless you’re of course a celebrity, then it’s ok). It’s really a short blog that you can text in from your phone. It has caught the attention of the media, making it one of the biggest social sites out there. With all that bandwidth being used and constant feedback from the server, one has to wonder, who pays for the servers? According to CNET, if they were to generate money, they would have a few plans, but for now they don’t have anything in store to generate a profit. Even though we’re in these tough times, it would be a decision worth thinking over.
How will they monetize these sites? No one clicks on Ads, no one spends any money on buying virtual “widgets”, the only way I can see them making any money off of it is by selling off the users information. Or perhaps getting people addicted and then charging them to access additional features ala Fazle style
ps: twitter is 140chars, are you on it? follow me @james_hart
Comment by James — March 11, 2009 @ 9:48 AM
Hey james : I think you are basically in agreement, which would make all three of us in agreement.
I’m in the position of developing little web 2.0 sites that are either a standalone spin-off of what’s already out there, or add-on applications for sites like twitter.
What I don’t get is : how are these people getting the money? And like James said, where will the profits come in?
There seems to be a great deal of hype about the internet, still, as a viable money making enterprise. But it seems most of the good ideas have been taken, at least the ideas that will make money.
Call me a pessimist, but I think we all need to start going back to the basics, and to stop polluting the internet with crap.
And by the way, facebook absolutely does sell an incredibly detailed level of information about its users…
I must stop now before I find myself unable to stop.
Comment by Ben — June 8, 2009 @ 6:59 PM
Well twitter seems to show some ads already, but only time will tell if they survive within the next few years. It’s an interesting experience.
Comment by Alex — July 11, 2009 @ 4:23 PM