There is definitely a bubble forming. Look no further than Facebook, a company with a multi-billion dollar valuation, negative revenues, and no business model in sight. CEO Zuckerburg says that for the next few years he is more worried about growth than turning a profit...well he can say that because he has a healthy cash reserve and therefore the time to come up with a business model. So for at least 3 more years their plan is to lose 50+ mil a year while they come up with a way to make it all back. This is an example Google set that everyone else seems to be content to follow. That is why fb's valuation really irks me.
Even though Facebook is arguably the premiere social networking site in the world they have been unable to figure out how to make money. It is one of the big questions in the Web 2.0 world, especially with social networking- we have users, now what?
Ironically, I think part of the reason they are so popular is because they have no business model. Like many popular web sites, users can get a whole lot of value for free. The magic advertising pixie dust dollars are disappearing fast, so relying purely on serving ads is no longer viable (unless you are Google). Running a simple web forum with a lot of users is one thing, but the magnitude of data being shared on Facebook is unprecedented really, and arguably should not be free.
Even though Facebook is arguably the premiere social networking site in the world they have been unable to figure out how to make money. It is one of the big questions in the Web 2.0 world, especially with social networking- we have users, now what?
Ironically, I think part of the reason they are so popular is because they have no business model. Like many popular web sites, users can get a whole lot of value for free. The magic advertising pixie dust dollars are disappearing fast, so relying purely on serving ads is no longer viable (unless you are Google). Running a simple web forum with a lot of users is one thing, but the magnitude of data being shared on Facebook is unprecedented really, and arguably should not be free.