Finally, The Internet As Intended.

I’m continually impressed with Scott Karp’s insights and level-headed approach to sizing up this Web 2.0 thing. Two days ago he painted this Web2.0 Doomsday Scenario:

You can see the pattern emerging. The network effect turns everything into a media platform, while at the same time obviating the need for media as a marketing vehicle because brands can use the network itself as a marketing vehicle.

So, you have the new media/technology industry orienting its collective business model toward advertising…at the precise moment when the paid media advertising pie may be on the verge of shrinking.

A recipe for disaster if ever I heard one.

 
Advertisers are now participants in the network itself (ala Wendy’s MySpace profile), and can effectively decrease their media spending because of the value they get form network participation. But the network itself is more and more heavily fueled by an advertising-based model. Yikes.

So what’s a web 2.0 company to do? For one, stay focused on creating personal value (the delicious principle) and treat advertisement revenue as a nice subsidy.  People will pay for service - especially one that ropes in the network effect (especially if its bionic). Also, avoid the self promotion network effect - the myspaces, facebooks, and such may have put their ad revenue at risk because its service is all about self promotion, which the advertisers can participate in directly.