Thursday, June 4, 2009

Can ads continue to fund the boom of Web 2.0?

One of the key reasons for the boom in the Web 2.0 is the power of free. With just an Internet connection, anyone can have access to useful applications like Google, Gmail, Facebook, Twitter, Youtube or Flickr without having to pay a single cent. So how do they get the money to buy the hardware, recruit the development team and pay for the utilities? Some of them probably got a group of rich investors, otherwise the companies are earning the money through web advertisements.

The ads model has been very effective so far, and it also attracted countless bloggers to publish content on the internet. Even I myself has signed up on Google Adsense to link with this blog (though I have yet to see any returns).

But the question is whether there are sufficient ads to go around and can ads generate enough revenue for the company or not? Will the investors continue to pump money into the company when they cannot see any profits in future? (Will you deposit your money in a bank that does not pay you interest?)

I also noticed the trend that there are some services to scrap off the ads from the actual site with addons like GreaseMonkey and Jetback. And if you access facebook from mobile devices like Apple Iphone, only the key content is presented (without the ads).

Even if you do not scrap the ads, how often do you click on the advertisement on the webpage? Yes, the amount of revenue is determined by how many people clicked at the advertisement on their sites.

So the big question here is sustainability. If you run a cafe, how long can you continue to offer free drinks before you get paying customers who are willling to pay for your drinks? Likewise, if people is unwilling to pay for the usage of web services and also unwilling to help that company to earn the revenue, then what will be likely consequences? Can you imagine what happens one day if you cannot access your Gmail or Facebook? Will there be a "Web 2.0 crisis" after the current financial crisis?

Will you start considering to pay for this services? Or what are your thoughts on it. I am interested to know.