The Economic Downturn, Web 2.0, and You

Are you ready for the end of Web 2.0? The writing on the wall says that we're in for a possibly protracted economic slump, and online prophets like Gawker Media's Nick Denton is already preparing for a sharp downturn in online ad spending in 2009 ("...the environment next year will be bleak."). But a few layoffs at Valleywag don't begin to scratch the surface of what an ad slump could do to our beloved online lifestyles.

Here at AppScout, we focus on consumer apps and Web sites, the vast majority of which are free. Some, like Flickr, are free to casual users but make their money with paid pro or enterprise accounts. Others, like Twitter, have no real discernible way of making money, but survive by living off investor cash until they figure out a business model or get purchased. But the vast majority of the fun stuff we look at here at AppScout is free to users and paid for with advertising (heck, so is AppScout itself).

We've had the luxury of using these sites and services for free because there have been advertisers to pay their bills, but with online ad inventory at an all-time high, what's going to happen if demand softens? Denton isn't the only one who sees this coming