edgeio Assets Sold

edgeio, which launched its classified ad platform a little under a year ago, has finally sold its assets, directing all inquiries to Looksmart and Vast. edgeio had secured $6.5 million (USD) in funding prior to its collapse, but when the money ran out in December, revenue wasn't sufficient to keep the company afloat, nor secure more funding.

The Guardian quotes edgeio co-founder Mike Arrington:

"The company burned through that money according to plan, meaning they ran out this month [December]. The product roadmap was fulfilled, meaning development lags didn't hurt the company. But the revenues didn't come in and user/partner milestones weren't met. And that meant no one else was going to put more money into the company."

edgeio, of course, isn't the only Web 2.0 company with a shared-revenue business model to have failed, with Agloco announcing its demise only a few days before edgeio. There are countless other companies also using the same business model, from pay-to-surf to shared ad revenue for running an application (like edgeio's classified boards).

The issue with such a business model is always going to be dilution of the audience. Web site owners are going to wonder how much more difficult it is to simply set up their own application rather than add someone else's to get all of the revenue instead of a portion of it. And shared revenue can only go so far when it has to sustain a company AND pay the users as well. The more users who sign up, the smaller the piece of the pie for each of them, at which point they'll most likely move on to the next similar company that promises a higher payout.