The Death Of Web 2.0: A Business Without Money

MySpace, Facebook, and YouTube are among the most visited websites in the world. Unfortunately, no one can figure out how to make money from them. According to comScore, Facebook, the smallest of the three, had 35.7 million unique visitors in the US last month.

No matter their colossal size, these internet properties bring in very little revenue and probably make very little money. Facebook was given a valuation of $15 billion last year. That may no longer be more than a pipe dream. Rupert Murdoch at News Corp (NWS) says that MySpace is missing its revenue targets. Its sales are under $1 billion, no match for old-line portals like AOL and Yahoo! (YHOO).

According to the FT "The shortage of revenue among social networks, blogs and other “social media” sites that put user-generated content and communications at their core has persisted despite more than four years of experimentation aimed at turning such sites into money-makers."

Google has no trouble telling its shareholders that any real money from its video site, YouTube, is well in the future. And, YouTube has the largest share of the online video market. But, much of the content posted there is of poor quality and hard to put into categories. Why would marketers want to be side-by-side with crap?

At large social network sites, finding the common bonds among the tens of millions of people who keep personal pages has been difficult. That makes targeting advertising almost impossible. There is also a concern that people who spend a lot of time at MySpace and YouTube are shut-ins with low household incomes.

Digg.com, Sphere, Newsvine, Del.icio.us. Dead as doornails.

Douglas A. McIntyre