Economist: The End of Free Lunch--Again

As part of Generation Y, I too, take the internet for granted. I have to come to expect a wealth of information and entertainment to be at my fingertips for free, or, at the very most, the amount I pay each month for internet service. What I don't think about is how sites I regularly visit like google, facebook, youtube, etc. are financially sustained.

"In recent years, consumers have become so use to feasting on online freebies of all sorts: news, share quotes, music, email and even speedy internet access."

What do you mean that I have to pay for these things?

The problem is that companies that provide these services to consumers like myself need money in order to continue providing their services. But for Web 2.0 services like facebook and twitter the challenge has been in setting up a business model that will actually generate a revenue to sustain their business. However, this is not a new problem for the internet industry...in fact, one of the main reasons for the dot.com crash was the inability of firms to find a way to get people to pay for their services.

However one company has seemed successful in offering free services, while generating a profit. Google's ability to bring in money from advertisements has fueled a new "Web 2.0 boom", where internet companies are attempting to emulate google's financial success by increasing the advertisement on their websites.

Alas, the number of companies that can be sustained by revenues from internet advertising is limited, and internet companies are again facing lay offs and shut downs. The future of web 2.0 sensations will depend more on how they manage their businesses as opposed to how creatively they push the potential of user interaction and the internet.