The Plight Of Online Business

I read a well written article on warspire, which described the way new start up businesses are struggling to stay afloat due to a rise in the ridiculous business models, which have had no thought put into them and always run at a loss.

I did a bit of research into this and to my shock, I realized a lot of the ‘big’ companies out there, such as youTube, Facebook, twitter and so on, may be doing very well as online applications, with a strong user base, however in terms of actual profit, well.. there is none. It seems to me that the business model has become, the notion of setting up a new innovative product, pushing it out there, then praying to God that Google decides to buy you out.

Even when this happens it still may mean that that business will not be a success. Take YouTube for example, even though it has been bought out by Google, it still doesn’t turn a profit. Its a lost leader in that respect. Its not really a surprise when you consider the massive costs incurred in buying and running the servers, plus the cost of employees to keep everything ticking over. The statistics truly are shocking to look at.

This isn’t to say there is no profit to be made. If you are clever about the kind of business you setup, take for example paypal, or google checkout with very small running costs, then you can make money. But the dot com boom is and the term easy money, is a thing of the distant past, maybe the web businesses of tomorrow will learn from the mistakes being made today.