In a
post today on his blog, entrepreneur Hank Williams laments on the difficulty of launching small-scale
advertising-based media startups while competing against venture-backed
companies that can afford to provide content and services for free
while building an audience. It's a similar argument to the one traditional
retailers made 10 years ago about venture-backed e-commerce
companies effectively selling dollar bills for 95
cents while figuring out how to eke out other revenues.
The difference is that the e-tailers were subsidizing their growth by
underselling products with actual value, while would-be media
entrepreneurs want to leverage the free distribution capabilities of
the Internet, while providing something of little or no value and
charging for it.
Silicon Alley Insider's Henry Blodget correctly
points out that the movement toward
free content is natural, but that if a provider offers something of
real value they still are able to charge for it and not rely on
ads. Whether it is money spent on producing the content or
subsidizing accelerated distribution, the addition of venture capital
to the equation simply adds to the scale, which still pales in
comparison to the resources existing profitable companies can put into
launching new properties.
Williams's opening thesis--"I believe it should be possible to start a
small
business and to have a small number of profitable customers, and to
earn a living"--would be absurd if applied to traditional areas of
venture investment such as semiconductor manufacturing or
biotechnology. But operating in an industry where distribution is
essentially free, he seems to be arguing that development and
manufacturing should also be free.
--Clifford Carlsen
See April 4 post from Why Does Everything Suck
For more see
Matthew Ingram,
Mark Evans and
Profy.com
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