Wow. Digg bleeding cash, ad revenues tanking, everyone want stuff for free–is there a smart, safe, and sane business model for the web?
The same cannot be said of Digg, a site conceived by television host Kevin Rose as a replacement for the editors who pick headlines for readers. On Digg, readers vote headlines up by “digging” them, or down by “burying” them.
For now, Digg is safe, insulated from the marketplace as a well-funded private company. But if Adelson no longer plans to sell the company, he will have to take it public. And when the day comes that investors can vote the company’s shares up or down, unless he can engineer a dramatic improvement in its finances, he and Rose will know what it feels like to be buried.
My question is only partially rhetorical. I know there are great business models online, but one of the staples of many of the companies I’ve been around have had the plan to get cash through ad revenue to offset investments, etc. Really this wasn’t a bad plan not too long ago. We see now that a business based solely on ad revenue will have a tough go of it. Okay, great what’s the other option?
If you look at newspapers they use ad revenue, but that is combined with classifieds and subscriptions. Unfortunately Craigslist pulled the rug out from under the classifieds and people are getting their daily news from the Internet and other sources, so we see where newspapers are now.
Subscription models used to work when the content you got for free was so-so at best. Now the free content online is amazing. Sure we’re tried doing subscriptions for online publications, and for niches I think they can work, but on masse? Not so sure.
What I’m thinking is as trends like the Detroit Free Press reducing home delivery and large media corporations have a harder and hard time making a go of it, is that we’ll see the ad market perk up.
As soon as it’s a provable fact that ad spend online turns into sales offline–well maybe we can start making money with ad revenue again..