A flood of announcements this week from the web 2.0 wunderkinds. YouTube is striking all sorts of pioneering content-sharing arrangements with film and recording studios (making it what – a repackager of professionally made content?); eBay is talking about putting Skype on the market (before it becomes so ubiquitous it makes no money); and Facebook, the ever-so popular but probably quite poor social-networking website, is apparently turning down funding offers that value it at about US$4bn (founder Mark Zuckerberg reportedly thinks it’s worth US$5bn).
Anyone would think it’s 2000 all over again – not the depths of the “worst recession since the 1930s”, as we’re so often reminded.
Don’t get me wrong – I admire the innovation behind all of these companies. But I find it hard to understand how anyone can see a bright future for them unless there is a fundamental shift in the way consumers interact with the internet – that is, unless people start paying for usage.
Perhaps counter intuitively, given it’s the only one that customers do pay to use, Skype is the most likely to burn out. It’s quite literally becoming a victim of its own success, as the saying goes. People only pay Skype when they use it to call friends on mobile phones or old-fashioned landlines. So every time one of those Luddites signs up to the service, Skype is losing a potential source of revenue. Seeing it out promoting its new application for the iPhone is a bit like watching a lemming in a long preparation for its cliff jump.
The others, however, are still entirely dependent on revenue from advertising – a market that is shrinking in the throes of the current economic turmoil. Now I know that internet advertising is holding up better than more traditional forms, but YouTube, according to various pundits, is still loss-making, and Facebook might be, too. Mr Zuckerberg insists its financial position is sound, and turning down a generous offer of funding would suggest he’s not desperate. He might, on the other hand, just be deluded. And before rumours of his investment rebuff began to circulate, he’d been sniffing around the money trail like a frustrated bloodhound tracking an elusive scent.
What’s certainly the case is that many advertisers don’t like what they see from either company. Big brands have taken one look at some of the weirdness that gets posted on YouTube and decided they don’t want to be in the same data centre, let alone feature their logo on the same web page. Facebook’s efforts to lure advertisers have been similarly in vain – principally because advertisers so far have been largely ignored by the Facebook crowd.
I think the deal between studios and YouTube just shows that both are getting pretty desperate (and locking up the Pirate Bay four isn’t going to dramatically improve the fortunes of the record industry). And I think Mr Zuckerberg is a greedy fool if he’s valuing FaceBook at 25% more than some generous (and perhaps naïve) investors.
The potential solution to both companies’ problems is to start charging customers. They’re reluctant to do so, of course, because their core teens-to-twenties audience doesn’t have much disposable income and has grown up using the internet for nothing (apart from the cost of access).
But that’s actually pretty cowardly. If people value something enough, they’ll stump up a small amount to use it. Let’s see Mr Zuckerberg figure out how much his 200m customers are willing to spend, and then we’ll have a fair idea of what Facebook – and its ilk – might be worth.

If you invited me to your party, and – as a popular sort of chap – I made it the talking point of the year, I would understandably be somewhat miffed if I were excluded from a subsequent get-together you were hosting.
Verizon’s chief marketing office says the end of copper telephone lines is nigh. In an interview with the LA Times, Chief Marketing Officer John Stratton said the company’s customers will all be served by wireless or internet-based phone connections by 2016.
Pre-Christmas online shopping in the US and Europe has been a disappointment to those who hoped that the world’s consumers hadn’t stopped spending but were just sitting at home and buying online. 


Generosity is typical in the run-up to Christmas, but it’s surprising to see quite so much charity from a listed company trying to make a profit. As the financial crisis deepens, Vodafone has just revealed plans to give the new Blackberry Storm handset away free to any UK customer signing a two-year contract.
A cracker for the consumer, a stocking filler for the record companies and a Boxing Day hangover for the telecoms operators. That’s one way of looking at Nokia’s new Comes With Music service, released in the long run-up to Christmas, which has received acres of coverage in this weekend’s newspapers.