Web 2.0 Revolution (Part III): Advertising Can't Sustain It

The high bandwidth cost characteristic of community services was indeed an issue in the 1.0 era. At the end of 2004, Yahoo! announced it would shut down its chat room service, citing the reason that there was a large amount of pornographic or spam content in the chat rooms. Those in the know could easily see that it was just about closing a high-cost, low-revenue service.

Free email and free online calendars all have similar problems. Take a personal example: few people click on online ads while reading emails. However, this service is so important that no portal site operator dares to abandon it.

Since advertising alone cannot sustain these services, portal sites, after 2001, desperately sought revenues beyond online advertising, which became their main operational focus. Among them, Yahoo! showed the most determination, constantly finding ways to increase the proportion of non-advertising revenue. By this point, my prediction had been completely fulfilled.

In 2003, operators gradually developed multiple sources of revenue, and survived the downturn. It was originally thought that the internet, led by portal sites, would continue to develop without much surprise. Unexpectedly, Google emerged and led a whole new set of rules. We should never underestimate the internet.