News for Web 2.0: Companies Need to Make Money

At the risk of making enemies, I'm one of the only people I've seen so far today not jumping up and down with excitement at Seesmic's purchase of Twhirl. I like the idea of Seesmic, even if I'm a videophobe myself. And I love Twhirl, and use it every second that I'm online.

Here's my issue with all these exciting mergers and buyouts and why I can't hop up and down: you have a start-up that doesn't sell anything buying another that doesn't sell anything. There are days like today when I feel like Julia Roberts' character in Pretty Woman pointing out that no one is buying anything anywhere, although Richard Gere still made pots of money.

Seesmic has apparently partnered with Lookery, so one can assume that Seesmic is making at least some money, although I'm not sure what Lookery is paying considering that they have signed up what looks like every Facebook application under the sun. But as talk of recession and bubbles and possible Google hiring freezes (link completely NSFW) gains momentum, at some point, we need to realize that people need to make money or we all go hungry.

Hank Williams says this all much more succinctly than I can over at Silicon Alley Insider; the prevailing method of montetization seems to be venture capital, and that's creating a false economy. Aside from the purchases, start-ups aren't going public. The rate of IPOs is decreasing. And the VCs are encouraging this mentality with the “figure out monetization later” pep talks. At some point, people need to make money, as the developers behind the popular Blog Friends Facebook app discovered. Not only is Blog Friends no more, but their other project, Buzzspotr.com is on hiatus as well.

In the meantime, every time a company makes a decision to improve or maintain a revenue stream, the “free is the new way” zealots go on a witch hunt. Everyone has been up in arms all week about Amazon telling print-on-demand users that in order to continue to use Amazon's shipping, they need to use Amazon's preferred POD publisher. How audacious of them to want to maximize efficiency and profit! As an Amazon Prime devotee, to me it makes perfect sense. If I'm buying something, I want it to show up quickly. That's why I pay the fee to have the free 2-day shipping. If I were to buy a POD book, I don't want to wait for it to show up at Amazon's warehouse to ship with the rest of my order. Either drop ship it directly from the POD you are using or use the one that gets it to me quickly. I shouldn't have to wait. Amazon has always been about customer service. Sorry, but I far prefer they make me happy. I'm the one buying the products. And they need me to stay in business, not VC dollars.

Williams is right; free is killing us. Slowly for some, quickly for others. And it's the companies who are smart and realize that profit is the goal who are going to survive.