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The Dot-com Bubble Version 2.0 August 16, 2006

Posted by earthlingconcerned in Uncategorized, Web 2.0, What if....

And that, I think, was the handle – -that sense of inevitable victory over the forces of Old and Evil. Not in any mean or military sense; we didn’t need that. Our energy would simply prevail. There was no point in fighting – -on our side or theirs. We had all the momentum; we were riding the crest of a high and beautiful wave. So now, less than five years later, you can go up on a steep hill in Las Vegas and look West, and with the right kind of eyes you can almost see the high-water mark – -the place where the wave finally broke and rolled back. – Raoul Duke, Fear & Loathing in Las Vegas (Film)

As the tech world reached the 21st century, one may have anticipated the steady growth in the dot-com sector to continue at the rate of torrent expansion seen in the late 1990s. Push technology was emerging and Pointcast was going to deliver it to the masses. People surely wanted to be able to take care of the needs of their pets and Pets.com would allow for this to happen on a national scale. The @Home Network (and subsequently its parent company Excite) wanted to give the emerging high-speed market a capable portal to deliver all their fabulous content. And Webvan wanted to make sure that as long as you had the Internet, you never had to leave your house for groceries again! However, an increasing number of these companies, and others like them failed to produce anything that came close to being profitable and the US economy (responsible for much of the trend) began to slow. As a result, the investments became to fizzle away and the stock market began to shy away from the ongoing trend.

All of the above companies (except for Excite) have since been relegated to the Internet graveyard. Several other dot-com behemoths came out with permanent scars (Yahoo!, AOL) or hit rock bottom because for other reasons (Worldcom Scandal). But the Internet did indeed survive (not that there was ever really a question) and new and improving technology took root within. Google and Yahoo! ended their symbiotic relationship as it became apparent that Yahoo was an unnecessary part of Googles puzzle. This newly realized parasite quickly learned how to function independently of its host and has since gone public, become a verb and taken over the world of internet search (even though Yahoo! remains the larger content provider). It appears that it didn’t take very long for the Dot-com bubble to expand yet again. The Dot-com world was indeed reemerging as other ideas and innovations began to spread. The world of blogging (i.e. what you’re reading now) took off. ‘Blog’ actually became the word of the year in 2004 as declared by Merriam-Webster’s. Social networking/bookmarking sites gathered much attention and subsequently gained fame and fortune thanks to investments. Another Web 2.0 creation to gain a mass following was Wikipedia (almost every link I is directed in their direction). It appears the renaissance of the tech industry has arrived!

But is it here to stay? The ancients that survived the aftermath of the boom a few years ago are reeling more than ever before. Amazon.com is worth just over half of what it was a year ago. AOL is running around blindly with copycat maneuvers (i.e. netscape.com copies digg) and offers of free service all while letting a large portion of their staff off just to survive. Ebay, another survivor who recently bought Skype in an attempt to remain relevant has also dropped off significantly throughout the last year. But these are the ancients, they’ve had their day in the sun and their time for them to move over right? Possibly, but current investment trends are slightly disturbing. Highly coveted domain names are beginning to sell for ridiculously high prices again (wiki.com (story)). Sites like Rupert Murdoch’s MySpace are expanding at a rate that screams disaster (I’m biased here but there is nothing on the site that is innovative in anyway) and venture Capitalist funded newcomer Youtube has yet to figure out how it’ll make back its money. According to a list of venture capital firms, the vast majority of those began after the first boom went bust are focused on Technology and Internet services. Supposedly there are several billion dollars being funneled directly into a sector that was of high risk a mere 5 years ago.

But is there really any reason to worry? New technologies allow for higher storage, processor power and bandwidth to be available much cheaper than ever before. Youtube and its incredible use of bandwidth can probably survive today by making a lot less than what was required for the same service only a few years ago. The internet obviously isn’t going away and its ongoing expansion into developing world markets proves this. But these sites, regardless of the future of technology and internet fads, still need to prove they can create revenue. I’ve always been of the opinion that the consumer/user always comes out on top when it comes to Internet services (especially ad-based). When pets.com went bust a few years ago, a few people lost several millions of investment dollars but I doubt there were too many customers who went into a spiraling depression as a result. The end of the first boom didn’t result in inflation or large scale financial depression like after the stock-market collapse of the early 20th century. There is just too much competition. Someone is bound to pick up the slack. The floundering Amazon.com tried to show this by entering the grocery market not to long ago and has long since offered anything you think your pet would care about. If Youtube ever did crash and burn due to an inadequate revenue ideal, others would most definitely fill the void. But regardless of this, recent investment trends and copycat business plans do point in a direction that shows a market that has once again become overly saturated. If everyone offers the same thing, many will suffer as a result. Supply and Demand, that sort of thing.

So what do I think will happen with version 2.0 of the web? I think 2.0 will eventually become 3.0 or Web2010 or Web-Kangaroo or some other name that simply represents progress of sorts. The users will continue to come out on top as for the most part, the services will remain free and the offered products will remain cheap (the elimination of retail outlets means lowered prices). Rupert Murdoch, oh, sorry, that was a typo, I mean to say several investors will lost millions of dollars here and there but investment by definition is a risky endeavor. It always has been, and always will be, that’s part of the point. There’s a slight chance of a tiered Internet system but I think there are enough giant truck sized web tubes to keep that from happening. So to recap, the average user will win. The media, who at some point in time decide a collapse is taking place will have something to report on and win as a result. And the investors will be able to eat caviar for lunch one day but will have to live with the reality that some time in the future, they might have to settle for SPAM, the cheaper alternative (yes, studies have been conducted, SPAM and Caviar have a direct correlation to one another). That’s not so bad, I mean, everyone has to live with spam once in a while.



1. Earthling Concerned » Snakes on a Plane and Late Night Television - August 23, 2006

[…] Samuel L. Jackson was interviewed on the Daily Show last week and made another appearance on the show during a Samantha Bee interview on Monday. This makes perfect sense considering the movie was going to be the next big thing. Thanks to the blog-o-sphere and amateur videos on Youtube, Snakes On A Plane was to show the world that internet readers and contributors are a force to be reckoned with. Web 2.0 and its users are here to stay! The Colbert Report, along with the rest of the late night shows have also made several references to the film, adding to the hysteria. So if this was going to be such a big release, why did it barely take the #1 spot with a meager $13,806,311 over its opening weekend? It could have to do with the fact that the internet hype market is still just a niche market and wide spread acceptance or knowledge of the hype was never achieved. Or that a good plot is really more important than good hype. Or maybe the money it made isn’t meager at all, that if it wasn’t for the hype, it would have gone straight to video and marked the beginning of the end for Samuel L. Jackson in Hollywood. Who knows, even Jebus wouldn’t have the answers to those questions. […]

2. CRiSPyToWN - Blog of Useless Data » Blog Archive » *POP* The Emergence of the Web 2.0 Bubble *POP* - September 1, 2006

[…] read more | digg story […]

3. Micas - September 14, 2007

Back in 2000, I read an investor analysis titled “content is king” in telecom, media and internet. Content is also expensive, at least as expensive as hardware, the server farms and the fiber networks.
This is the cleverness behind Wikipedia, and Google which have promoted a type of “do-it-yourself” Internet which provides real value to the users. Like two-way talk radio, blogging on the Internet gives thousand of otherwise passive listeners/viewers/spectators a podium, a channel to get their ideas out in the open.
Finally, the smallest forgotten village can become again the center of its own universe, after spending decades in marginalized.

4. Gost - March 11, 2008

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may be i need my self blog

5. Snakes on a Plane and Late Night Television - earthling.concerned - October 16, 2008

[…] Plane was to show the world that internet readers and contributors are a force to be reckoned with. Web 2.0 and its users are here to stay! The Colbert Report, along with the rest of the late night shows […]

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