I couldn’t help but be overcome by a sense of deja vu when I read Michael Arrington’s already much-discussed Bubbles, Bubbles, Bubbles post on TechCrunch today. As an editor, I quickly recognised the generic style of piece you tend to roll out every time you start to worry that your readership or advertising base is about to evaporate.
When I was editor of channel mag ARN, I wrote a number of such pieces when the direct model seemed like it might be the death of the reseller community. Chin up chaps, it’s all going to be alright in the end. The channel, despite many dire predictions, continues to evolve it’s way through troubles and ARN lives on!
When I was editor of Network World Australia magazine and our advertiser base started to dissapear on account of Cisco ruling the world, I wrote an editorial about the need for healthy competition and a strong, diverse networking industry. It wasn’t long after that the magazine was closed amidst a rash of networking consolidation and rationalisation.
Even now, writing for tech journalists on ITJourno, I still regularly do my best to champion my readership and our industry, in the face of declining advertising and the ever-increasing threat of new media models. It’s just what you do as an editor, both out of genuine belief in your readership and also a sense of self-preservation.
You do sense that Michael is starting to worry a little that the TechCrunch gravy train may be on the verge of being derailed. He shouldn’t worry about criticism of TechCrunch’s reporting of the failures. But he is. “I also opened up a thread in the Forums to discuss whether or not the TechCrunch DeadPool is a bad idea. Let me know what you think,” Arrington wrote in another post today.
He’s right to worry about it too. Every negative piece TechCrunch runs affects the perception of the health of the sector and therefore the amount of cash flowing into it. But all-in-all, TechCrunch has done a pretty admirable job of handling this inherent conflict-of-interest and in their coverage of the negative stuff. Of course, it’s always far easier in the good times…
Which brings us to The Industry Standard. TechCrunch is a phenomenon and what Arrington has created is amazing. But The Industry Standard that John Battelle and his troops created was even more amazing. Unfortunately, though, when your market suddenly dries up, it really doesn’t matter how amazing you are – you’re a goner. The Industry Standard editorially was never better than when the whole thing started crumbling and its magnificently chronicled the whole crash before it too went down with the ship.
I do hope we don’t end up saying the same thing about TechCrunch. There’s no industry I’ve known, like the Internet industry when it’s running hot and no more enjoyable discourse than what springs from the coverage of same.
We can take hope from the parallels between TechCrunch and The Industry Standard and Web 2.0 versus Web 1.0. The Industry Standard was a grand publication, with a massive headcount, big editorial and marketing budgets while TechCrunch is run pretty indepdently by Arrington with a little bit help from his friends. The arse could drop out of the Web 2.0 market nad TechCrunch could still be run profitably. The same can be said of many of the startups. Piss off the stupid VC dollars, cut 90 per cent of the overhead and you have a lot of little businesses that can do ok.
Yet, on both counts, I guess the question is, is it worth the bother? Would Michael Arrington bother with TechCrunch if he was only making a modest profit from it. Would all these little startups bother with the stupid hours and the lack of stability if all that was on offer at the end of the day was a modest payoff. Certainly VCs won’t. “One very well known Web 2.0 investor tells VentureBeat he’s made his last Web 2.0 investment,” said a post on the subject on VentureBeat.
Ever since, I began this blog as a Web 2.0 “reality check” a year ago I’ve harped on about the need for companies to have some idea about how they’re going to turn a dollar and to at least have a pretense of a business model. The network effect is all well and good, but you can have all the useage in the world but if its not monetisable, IT MEANS NOTHING. The businesses that had network effect that came through Web 1.0 also had very monetisable products and audiences (ebay – auctions, google/yahoo – online advertising, amazone – ecommerce). It’s not hard to rattle of a gazillion sites that had enormous eyeballs but couldn’t turn the necessary bucks from them. At least these days, you can always make some money if you have traffic, but whether it’s enough to keep this industry in the style it has become accustomed to, is another matter.
I do agree with the consense that Web 2.0 won’t be a bubble in the form of a solitary sphere floating through the air that suddenly pops when it’s pricked like Web 1.0. But I do think there’s a big danger it’s going to go the way of a bubble bath. You start off with a ton of hot water, froth and fun, but as things cool down, the froth starts to slowly dissipate till you end up with a soapy film on lukewarm water that’s comfotable but not very stimulating. That’s when most Web 2.0 folk will reach for a towell and try and find a jacuzzi just as they did after Web 1.0.
If Michael Arrington really wants to positively keep driving along this industry, I call on him to start writing about some of the companies generating real profits. Let’s give investors and the industry as a whole, some evidence that there is real money to be made. TechCrunch profiles almost always talk about user numbers and traffic but how often is the question asked when will you be profitable, what are your profit projects, how much money are you losing/making now.