Let me go out on a limb here – the only Web 2.0 business that is actually sustainable on an ongoing basis through advertising is Google – and why them? Partially first mover advantage, mainly scale efficiency and strength and a lot of significant aggregative plays.
So if only Google will make bundles of cash through advertising, has social media got it wrong? Is the Facebook deal, the Myspace deal and all the VC being sunk into social media just plain dumb?
Sort of yes and sort of no – if the play is purely based on a membership figure set valuation, or based on advertising revenue projections, I contend that the play is dumb. However….
Think about it – you’ve got a network of users/member, you’ve got some good enabling technology in place, you open up communications such that diverse groups of users can readily connect and communicate. The next step is plain to see but not yet seen – BT Tradespace is edging closer.