Don’t look now but 2008 is poised to be the year of the Web2.0 implosion. In brief, consumer confidence is low, retailers are projecting a slow holiday season, Web2.0 is all about advertising… this all leads to one big crash. (Ok, actually, I believe it’s going to be a relatively soft landing in mid-late 2008, but crash just sounds better. Besides, if I didn’t join the hype, I wouldn’t be able to link to this terrific video.)
Retailers have been running scared this entire holiday season. The first Xmas advertisement appeared just a week after Labor Day! The first special holiday season sales were held the weekend after Halloween! Even with Black Friday (the day after Thanksgiving), retailers reported a slow start to this shopping season. And the latest sign is that 8 Macy’s stores in New York stayed open around-the-clock from December 21 through Xmas Eve. Other retailers were holding 64-hour sales hoping that last minute shoppers would save the season.
I think it’s time that we all accept it, with the subprime mortgage problems and the staggering increase in the number of defaults on credit cards, the consumer has carried the economy as long as he/she could. And, the companies that will pay the most are going to be Web2.0 ventures.
What’s scary about Web2.0 is the homogeneity of business models across all companies. Everyone is fighting for advertising dollars. Web2.0 is, more or less, all about user-generated content. This euphemism just means that a few intelligent people built some cool new tools that all the rest of us use to fill the internet ether with our opinions without having to know any of that technical stuff. And, because the typical person has been spoiled with free access to more and more online, it’s just not possible to get end-users (you and me) to pay for these tools. As a consequence, people just won’t pay to produce (which they never should be asked to do) or consume content. So, everyone is jumping on the advertising bandwagon.
Haven’t we seen this all before? Now we’re talking about “unique visitors per month” and “duration of page views”. This sounds like the old “eyeballs” metrics from the dot-com days, doesn’t it? Wikis are the new newsgroups, Blogs are the new personal websites, Social Networks are the new Web Portals: Facebook = Yahoo, Wikipedia = Usenet, WordPress = Geocities, Yelp = CitySearch, MyPunchbowl = Evite, Viewpoints = Epinions, Glam = iVillage.
This raises the question: Can’t anyone actually sell anything anymore? And, unfortunately, the answer is: We don’t know, because nobody’s even trying. An unfortunate rule of all economic belt-tightening is that the marketing budget is the first one cut. As a consequence, those companies that rely on advertising revenue are hurt the worst.
Just as the dot-com bust helped us figure out the right number of online pet stores, Implosion 2.0 will trim the number of social networks and useless Facebook widget builders. And that’s not a bad thing! Everyone’s gotten fat and lazy off of advertising for too long now, and it’s time for entrepreneurs to innovate around other business models.
