by Jeff Jarvis
There’s a giant pin stalking the land of Web 2.0 and the people are fleeing in fear of the prick.
But little do they know, what they’re really afraid of is not being a fucked company but instead a faked company, that is a company that is not grappling with the realities of business — value, customer base, efficiency, marketshare — because they are enveloped in some false and protective bubble of hype, VC money, or — in the case of the big, old companies — monopoly. The same fear is stalking not just the new kids but also the old guys.
Go take a read of Dead2.0, a good and skeptical blog that lacks the supreme snarkiness of other efforts and also does not try to paint the whole world in contrarian colors. Pessimism isn’t his (or her) unified theory of the universe. No, the blog merely tries to rationally find the irrational. And that makes it all the more ominous.
Dead2.0 is, of course, reminiscent of FuckedCompany.com. I hadn’t been there in ages, since the last Bubble 1.0 company faded into schwag nostalgia. But I see it’s still in business, though now it also reports on big, old f’d companies like Delphi, Delta, and Dell. (It is now officially bad feng shui to start a company name with the letters d-e-l).
Now see John Battelle, Paul Kedrosky, and Fred Wilson ruminating over whether there is a VC bubble. Kedrosky leaves the TechCrunch bash — as I did after a PaidContent bash — fretting that the equilibrium is off. Too many companies are getting funded — Battelle says there are 200 video search companies with bucks in banks — and not enough are failing, which means that business success — audience, revenue, growth — is not concentrating sufficiently to anoint winners (or, I’ll add, in the cases of, MySpace and YouTube it is perhaps concentrating too quickly). Wilson says fret not, for the bad companies will die. But because they are cheaper to start, it will take longer. And because they are cheaper to start, I’ll argue, more bad companies can get funding. And because the VCs have to fund more companies to invest all the money they’re handed, they as a group are now going to be less picky and more stretched and less able to watch over the companies in their portfolios — but, for a while yet, they’ll be less worried because each investment is less of a big deal. In this case, less could be more trouble. Small is the new big headache.
Now venture over to Steve Rubel’s Micropersuasion, where he got much deserved linkage for worrying that too many 2.0 media efforts are being supported by the ad spending of fellow (unprofitable but VC-backed) web 2.0 companies. That kind of rob-Peter-to-pay-Peter spending is, indeed, what inflated the last bubble and Steve wonders whether it is happening again. Valleywag assessed the risk to a few 2.0 media empires. This is why Scott Karp argues that we’d better start getting our act together and figure out how to provide the metrics that real advertisers with real money demand. Amen. This is also why I’ve been arguing — whistling in the wind of a leaking bubble, perhaps — that we need an open ad marketplace with both the metrics and the means to sell and accept real advertising.
But, again, this isn’t just about the new kids. Now see Kit Seelye’s comprehensive tearjerker about the late Knight Ridder in today’s Times. It’s hard for me to get up much sympathy for either the company or its bete noir, investor Bruce Sherman, who caused the company’s sale, or its purchasers — none of whom, I think, is really tackling the fundamental change that is called for today. Getaloada this: Seelye explains why Sherman invested in papers in the first place and it’s a case of the blind buying the blind:
Mr. Ridder said Mr. Sherman was optimistically buying newspaper stocks after the Internet bubble burst because he was driven by the belief that “the Internet is not going to be as big a factor for the industry, so we’ll go with newspapers.”
After all this, Sherman’s investments are no better off and so he tells his investors: “In some regards, it would be easier for us to abandon the investment theme than to continue to argue the point.” Oh, nevermind.
Some of the owners and employees try to blame all this on the public marketplace. But that’s crap. All the marketplace wants is rational business. And private owners can be rogues, too. See the Santa Barbara News Press, where the rich owner is now trying to get $500,000 out of the former editor for daring to stand up on principle. See also rich man Mark Cuban and how he’s trying to redefine journalism. No, those hoping to find knights on shining gold piles are just looking for a means to put off for a little longer — perhaps until their retirement — the inevitable pressure of the market.
They all keep trying to get sap out of dead trees. Well, not all. In response to the Economist’s cover on the (upcoming) death of (some) newspapers, Guardian Editor in Chief Alan Rusbridger said: “The supply chain of newspapers is utterly Victorian and very expensive.” The point is to get past the past.
The simple truth is that newspapers in the U.S. have been living in their own bubble — the bubble of a monopoly — for the last 50 years, since TV killed off their print competition. Now they have to deal with the marketplace and they simply don’t know how to do it. And 2.0 media companies have to learn to deal with the marketplace, too. That’s what this is all about: economics, pure and simple. The new companies face the same business necessities as the old ones:
1. Value: You have to provide value or, obviously, you’re worthless. And today in news and media, value is redefined. Value no longer includes delivering the commodity news everyone already told me. But value does now include listening to me and helping me create media alongside you. And value always equates to credibility.
2. Customers: In most media, you will still have two customer bases: the people and the advertisers. You have to serve a public large enough to serve to advertisers and you have to give advertisers a competitive return on investment and the means means to measure and prove that you did. Only now, you have more competitors — unless you chose to turn them into partners in a network — and some of those competitors are working for free.
3. Efficiency: There is no rule of journalism that says newsrooms and newspapers should operate as they always have. As I’ve said often, they must shed inefficiencies and resources put to commodities and ego and must find their true value. Return to No. 1.
There is no 1.0 or 2.0. There’s just a vast marketplace with endless opportunities and challenges and no end of new tools and realities. It’s not a new world. It’s the same world but it just keeps changing, faster now than ever. While you have money in the bank account — whether from VCs, or from ad budgets paid for by VCs, or from monopoly power, or from benevolent rich owners — you can avoid the pressure of the marketplace and run a business that would not stand on its own. That’s what bubbles are about — not irrational exuberance but irrational business.
So if we stop looking at this as if it were the border between two worlds but instead one world operating under change, then we would find the ways for old to work with new, big with small, professional with amateur. That may mean new companies acting as the laboratories and development arms for old ones. It may mean big media companies expanding by reaching out to the small. That may mean journalists working with their public to expand the reach of news. That is what our new, networked world demands.
: AND: Ross Mayfield’s post.