The Economist argues that the demise of a popular but unsustainable business model now seems inevitable:
The idea that you can give things away online, and hope that advertising revenue will somehow materialise later on, undoubtedly appeals to users, who enjoy free services as a result. [...]
Ultimately, though, every business needs revenues—and advertising, it transpires, is not going to provide enough. Free content and services were a beguiling idea. But the lesson of two internet bubbles is that somebody somewhere is going to have to pick up the tab for lunch.
The Web 2.0 bubble is clearly moving away from being as profitable as it used to be. What is interesting is how often these “eyeballs” that google and facebook (among others) added to their search engines vs. profile pages have stayed fairly strong in comparison to other websites doings. Obviously, as the name implies, these ‘eyeballs’ are indeed eye-candy and in a society where we each day process several thousand of ads and images, it is interesting how they seem to stick, as a snapshot in the back of your head. Interestingly enough, one even tends to remember where we’ve seen some of these ads as they tend to pop up from time to time. Even though those ‘free’ services that were advertised a while back aren’t making the same progress, it seems like the “eyeballs” are a newer and seemingly more effective way to do marketing. The question for the future – who will pay those bills from those ads that we see now if they don’t bring in enough investment?