Bubble 2.0

Reacting to the Google-YouTube deal, Seth Finkelstein shares his thoughts on the structures of what he calls “Bubble 2.0.” With some well-placed humor, Seth hits the nail squarely on the head, touching on some of my general concerns with this whole Web 2.0 thing:

Bubble 1.0 was about people paying very high prices for assumed productively gains from the Internet. Take “Pets.com” – look, you can order pet food over the Internet! Cool – but how much would you pay for that company? The key was that it didn’t cost a lot to play that game. Find some niche, make a little improvement, profit.

Bubble 2.0 is all about data-mining and getting suckers to work for free (this last is called “user-generated content” or “citizen journalism”). But that’s a fairly expensive game to play (maybe not expensive from a venture capital fund standpoint, but it’s not a garage operation). It also requires a huge amount of marketing. It’s necessarily to either somehow convince all those suckers that they should work for free, or find out what it is that they’ll do that you can exploit (this is why there’s a bunch of pilot-fish around the sharks, saying something like “Ecosystems are conversations. When the shark eats you, you are a *participant* in the circle of life – you are the nourishment formerly known as prey, think of yourself as a citizen-lunchmeat”). Both are tough sells, either to the little people that they really want to enrich you by doing grunt labor, or to the big people that they really don’t want to pauperize you by suing about copyright infringement from all that “sharing”.

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