Dot Com Doom: Is it all over for Internet startups?

Posted by admin on Apr 4, 2009 in geekery, opinion, technology |

burst-your-bubbleOnce people couldn’t get enough of Internet start-ups. Companies  moved from cynical to seriously obsessed and it seemed every day a hot new site was starting with investors ready to splash the cash to get a piece of the digital pie. But recently we’ve seen a turn for the worst, and it’s not just the falling economy that’s led to the downward spiral of success of the once salutated sites.

Earlier this year Gawker media, a SF startup that spearheaded the dot come boom abandoned many of their flagship titles, fired staff,  and reluctantly joined the gradual disintegration of the online market. It seems the dot com business is no longer as profitable as it was, nor is it attracting the investors/advertising revenue so it has fallen into a catch 22 trap.

But why has this happened? When sites flourish in terms of traffic you’d automatically assume these figures would be followed by cold hard cash, but that’s not the case? Is it the fault of the bedroom blogger- the whimsical at home writer whose words devalue those that are paid for? Or could it be that though the model looks positive, making money off free content is harder than previously thought?

Last year the New York Times made the groundbreaking decision to allow the everyday browser free access to all its content rather than for those who’d paid a fee to subscribe- great for us, but you have to wonder if that was actually a smart step. Surely if you can read everything for free you won’t purchase the paper and then sales will decline? Or  was this a web savvy move that drew consumers away from free online periodicals to one they trusted and adored? Reports sat that’s the case, and the NYT Online  is seeing more traffic than ever before!

With so many sites springing up everywhere loyalty is key and if people have already bought into your print brand it follows that they’ll support the online version, to the detriment of other sites.

failwhaleOther sites, though popular have found their business model is severely lacking- Twitter would be a great example of this. Though Twitter has surpassed itself in terms of usage, media coverage and site enjoyment, turning this service into profit is still being debated. They’ve discussed having paid for accounts, or ads on pages, but as yet nothing has been 100% finalized.

However there may be an upside to all this doom and gloom.  The bubble may well have burst for already established start up sites and blogs who employ a heavy amount of staff to keep their traffic, but it does leave room for new sites to venture forth- those with minimum capital to spend, but who are able to pick and choose from the recently redundant but uber talented journalists out there.

One could say that it might make more sense for established sites to agree to take a loss for one year in order to hold onto their established hardworking staff, but those that have chosen (understandably) to somehow try and wrest a profit in the failing market, will find their missing staff snapped up by emerging companies.

A very talented lady I know is starting work on a new startup site next week, and there are rumours of a variety of new interesting start-ups in the work in all area sectors. Sure, they’ll burst onto the scene with fewer writers and have to build up their traffic base from scratch, but people who have enjoyed the writers work on other sites, will find themselves following them to their new ventures. When talented  writer Bonnie Ruberg made the move from writer at Joystiq to working on other projects, among them her fab blog Heroine Sheikh,  I still followed her as I find her endlessly entertaining and I’m sure that other people who have built up a following will enjoy similar success.

After all, no matter how well designed a site is, the content will only be as good as its writers, and to produce good stories you need writers with energy, enthusiasm and experience. It may be cheaper to hire a fresh faced graduate who is desperate to break into the market, and they may well be talented and passionate- but you can’t put a price on experience and web know how.

dotcomSo what’s the overall consesnsus? It’s not a good time to be working online, but it’s probably a safer bet than working in print, due to the increased overheads that brings. The Dot Com Boom may well be on its last legs, but at the same time, the market has widened enough for new business to enter it.  Indeed, one could almost be jealous of new start ups as they haven’t had to learn the hard way; they can now employ writers who understand the ins and outs of the web and will educate them on what works and what dosn’t , both editorially and commercially.

The boom has gone for now, but in its wake I predict a host of new upcoming sites, which combine new media expereince with a wealth of writers desperate for full time employment. Time will tell which companies will succeed, and I suspect by December 2009 we’ll have a much clearer idea of whose business model has worked, and whose has foundered.

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1 Comment

Susan Kishner
Apr 4, 2009 at 3:32 pm

Well said



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