The Internet "Golden Age" is Closing
One of the first posts on this blog was about the future of the internet, and the likely decline of the “Golden Age of the Internet” to quote John Dvorak. My older post was about government and lawsuits causing a decline in online freedoms. The freedom of the Internet seems to be on the decline once again, but this time the driving force to change is economic.
Some notes from around the Internet:
1.) This past week Rupert Murdock has stated that the internet is over. Advertising revenues are down and the business model for online news cannot be sustained without going to a subscription model.
I think the guy is off his rocker, and his plans to charge to access newspaper sites is quite dumb. Subscriptions for news online work for specialized newspapers like the Wall Street Journal or Variety because these papers are the paper of record for specific industries. General news sites are a dime a dozen, and the only way a general newspaper could make money on a subscription plan is if every paper did so.
2.) You Tube is changing its business model, in light of half a billion dollar losses expected this year. Check out this video, or at least the first couple of minutes. The guy starts blathering at around the 3 minute mark. To me, the video has an opposite effect on me than he intended.
When you are losing money as bad as You Tube is, you have to reorganize and go back to what works. Hosting users videos for free is a major component of the site, but it is also the least profitable. Hosting video from commercial distributors and advertisers that are good enough to get advertiser support is profitable, and that is exactly where You Tube is going to go.
I’ll even go as far as to predict that You Tube will start charging a fee to host user videos. This will no doubt reduce the number of videos out there, but the overall quality will improve.
3.) Two of the largest and fastest growing websites, Twitter and Facebook, are both operating in the red as well.
Facebook is probably close to profitability right now. The last reliable numbers I saw were in 2007 when the site was spending twice what they were bringing in. Since then the employment has doubled, and I assume the expenses have as well, but also since then the user base has quadrupled, and hopefully the revenue has too. If so, they are close to being in the black now.
Twitter is a popular tool in need of a way to make money soon before they run out. There is minimum advertising there, and selling ads for tweets is likely to be a hard sell, especially since most tweets are sent and recieved via feeds that dont pass advertising messages. Rumors have been flying that Twitter is ripe for take over. Who knows what will happen there.
We are not approaching the end of the internet (sorry Rupert), but we are at the end of the “Golden Age” of the internet.
The age of getting a site up and running with VC money and waiting 5 years for profitability are over. The new model forward is going to be “Make Money quickly or Die”
As sad as I am to see a lot of the FREE benefits we have been enjoying online start to disappear, a leaner and meaner internet may prove to be a good thing in the long run.