Recession Will Not Hit Internet Industry… Oh, Really?

I am not really all that superstitious – maybe not superstitious at all instead but today when I saw the International Herald Tribune article titled “President George W. Bush speech to the nation on the economic crisis” under the number 666 in my Google Reader I could not help but feel more than a little worried about it.

It was not actually about the apocalyptic coincidence of the title and the number – instead it was about the real-life situation and all the lies around the financial crisis that really seems to be burning like a flame already and promising to set us all on fire eventually, including the internet industry where the major players still claim we will stay safe in the middle of the turmoil. Unfortunately, it is hard to expect some particular niche to stay safe and comfortable when everything around is crashing. Just does not sound realistic enough to me.

Unfortunately lies are becoming ordinary these days for politicians but president ensuring Americans that citizens won’t be hurt by the financial crisis does not ring true either and many Americans have already felt the crisis in depreciating real estate and investments along with growing prices and other factors – not to mention the nervousness in the air.

Skimming news headlines about the financial crisis and recessions again and again, I am mostly concerned about one question: what exactly should we expect for the internet industry in the nearest future?

True, for now industry analysts still predict that online advertising market will continue its growth, investments are still here and Mayfield Fund proudly reports on the new fund raised – so everyone seems too willing to repeat the mantra that internet industry will not be hurt. Are we all just trying to delude ourselves here?

Honestly, what should internet entrepreneurs, engineers, designers and others really expect? My opinion is that we should be getting ready for a crisis here – even if we are optimistic and tend not to expect the total disaster. But we still remember the dot com crisis of 2000 well enough not to have the jitters, I think.

It is obvious that many of us (if not the vast majority) in the internet business rely on advertising revenue heavily. And this revenue stream depends a lot on real-life companies that will be sure to cut their advertising expenses. And only Google will be the online business that will have a chance of doing pretty well even in a recession because its revenue is closely related to companies making actual sales – not just getting eyeballs to watch their banners.

I don’t want to sound pessimistic but I think it will only be better if we admit the truth – the truth that the politicians seem to be too unwilling to tell us, as if this truth will hurt us more than the crisis itself. It looks like the government tries to protect us like kids from a stressful situation of realizing a loss of candies, at the same time fishing those very candies from the pockets.

And giving away the $700 billion worth of candies to cover incompetence of other people does not seem like particularly fair, especially when it comes to internet business that can be responsible for making sure we will see another bubble because of failing to see we need other, more reliable revenue streams but hardly can be accused of causing today’s financial crisis. What do you think, will the internet industry be hurt or not?