Types of BW just hype up things. Although a fortune can be made by sites like digg but too much in too less time is certainly difficult to attain.

REAL people in the know don’t read Business Week. It’s like the day trader version of news. Find the biggest hype, boost it, then drop it. Never a follow-up story, never a tinge of reality.

Bravo, Joe, Bra-freakin-Vo.

That was like delicious ice-water in this desert of web2.0 blather….

And to Tom, it’s not just Business Week.

Nice article Joe, I think you should tag it under Reality 2.0.

It’s amazing how all these “connected” people are just raking it in hand over fist with regards to their Web 2.0 sites. I think some of that definitely is over-inflated.

What’s worse, is that you are now seeing mainstream journalism starting to buy into it as well!

I agree, kevin himself said he’s no millionaire… that’s what his STAKE in the company is worth. When I hear ‘made xxxx dollars’ I think, ‘that’s in the bank’.

“That statement describes also every TV network, newspaper, and radio station in existence. Professional sports as we know them would not exist without ad revenues. ”

No doubt, but how many local radio stations have a market capitalization of $1 billion? There are TV stations, newspapers, even large radio stations in the US that generate ad revenues that would make most dot coms drool.

The bottom line is that there is nothing new here, and whatever.com has no real edge over established media, yet industry experts continue to act as if these are new ways of doing business. In reality, it’s not much different than CBS printing ads on eggs…it just reaches a wider audience.

I still say that Digg, Myspace, facebook, etc. are all faddish by nature, and while they may command several million hits this year, next year there will be another Gen Y fad that turns the heads of everyone under 30. As such, what’s speculatively worth $60 million today will not be worth more than a few thousand in 3 years.

That price tag sounds way over the top when compared to revenue, but it’s possible that Digg is worth that amount to the right people because they can better unlock its potential. I can see search engines being pretty keen to acquire Digg because it gives them a human-edited directory of what’s hot (the same reason Yahoo snapped up delicious and Looksmart got furl), with all the community already built-in. I don’t know how much it would cost to create a replacement for Digg, but it wouldn’t be cheap. $200m might make business sense as part of a bigger portfolio for a search engine company. Though probably not Google, who tend to like to build stuff or buy it cheap.

this site does nothing BUT accept empty posts… read the article and psots 1-46 and tell me where the actual content is…

That students in secondary and post-secondary education courses don’t have the cognitive ability to discern between two opposing arguments presented in a standard newspaper article. Note, please, that newspaper articles are STILL geared to a fourth-grader’s reading level.

That study (and I’m not a big fan of studies, in general) apparently applies to Internet readers as well. For instance, most of the people who came here by way of Digg seem to think a site they like is being attacked. They and many other posters don’t seem to have any idea of what the post they are criticising is actually about.

That’s sad – very sad. To the rest of the posters and readers – kudos on having more than ‘testing’ smarts.

This is Bubble 2.0 and guys like Kevin Rose should sell why they still have the opportunity. Unlike the first bubble, IPO is not an option for most of these companies so the acquisition route is what’s fueling the market. A lot hinges on the success of existing acquisitions. News Corp. needs to monetize MySpace fairly quickly and show its shareholders a ROI on the massive investment. XFire needs to generate a nice return for Viacom (who reportedly paid 10x revenues for it). Etc. etc.

Remember, if somebody buys Digg for $200 million, it has to make $200 million for them just to break even. That’s no small task given current revenues are only $3 million. If the major media companies who represent the only viable exit strategy for most of these companies start to see evidence that paying massive amounts for hugely popular startups cannot be justified to shareholders, this market dies. If the “case studies” like MySpace validate the fact that there’s no way to generate a return for shareholders within a reasonable amount of time when you pay a significant premium, this market dies.

TechCrunch today reported that delicious, purchased by Yahoo, is in decline and may be “tanking” depending on your viewpoint, highlighting the inherent risk to big companies that spend big bucks to acquire startups in markets which have little barrier to entry. There is no “new economy” – companies can’t live on hype forever, they need to generate massive profits if they want to be massive businesses.

The lack of any major acquisitions lately (on the size of MySpace), despite the fact that Facebook and Bebo have thrown around huge numbers, should serve as a warning. AOL just launched its own video service instead of buying a service like YouTube. I think this may be an indicator that they recognize that there’s much less risk to shareholders by developing their own services in-house. Again, the barriers to entry in most of the Web 2.0 markets is almost non-existant. What drives the high valuations is popularity and userbase, but if those can’t be monetized, and the userbases are highly fickle, they’re practically worthless.

The signs are showing and I think they’re saying to these companies that it’s better to get out while you can make money because the market is not going to be pretty when it collapses. The fact that lots of people are talking about Bubble 2.0 is not a good sign.

If I were a major media exec, I would not acquire any of the popular startups at these outrageous valuations. Instead, I would wait for the bubble to burst and then acquire them in the firesales likely to ensue. Alternatively, they can develop competing services in-house and simply wait for the startups to fail, which they will certainly do if they can’t monetize and their only exit strategy (acquisition) is no longer viable. The article is wrong – guys like Kevin Rose are not in control. The companies that are potential acquirers are in control and if they recognize the power they wield over these startups, they will make out very well.

It was just announced today that Google is paying News Corp $900,000,000 to provide search capabilities for MySpace. I guess Murdoch has almost doubled his investment into MySpace. Damn Him!!!

Google is the next Excite. Bubble 2.0 here we come….

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