Bret Taylor on FriendFeed's Road to Monetization, Early Surprises

This evening, at a panel on lifestreaming put on by the MIT/Stanford Venture Lab, FriendFeed co-founder Bret Taylor spoke about the popular aggregation and lifestreaming service's early months, explained what he and the team are trying to do through developing the site, and what we can expect from FriendFeed, as the company builds plans to monetize and further expand its growing user base. The panel, moderated by All Things Digital's Kara Swisher, also saw participation by angel investor Jeff Clavier of SoftTech VC, Leah Culver of Pownce, and Loic LeMeur of Seesmic.

I attended the session and took notes via laptop, so all quotes are "best effort."

Bret's presentation stated that FriendFeed, which currently supports 43 different Web services, and is now tracking greater than 100 million individual entries, is designed primarily to enable content discovery and social media consumption through a shared experience with friends and peers.

Growing Crazy Fast After a Slow Start

In front of an audience at the Stanford School of Business, Bret, in a quick presentation utilizing Apple's Keynote, recounted the team's reaction to the site's initial traffic spike following launch coverage in the New York Times and TechCrunch which evaporated in mere days. He said it took four months to return to the initial activity level, in between which the team went through varying stages of excitement, strategizing, realism and depression, while they openly questioned what they might have been doing wrong - having a history of successful product launches at Google. However, not too long later, traffic began to balloon in the beginning of 2008, reaching a hockey stick spike from March to June, during which the team's excitement turned to sheer panic, as they looked to scale their product and maintain speed and reliability amidst unprecedented demand.

Initial Development Missteps or Oversights

When FriendFeed added the ability to "like" items and make comments to a friend's feed, it opened up the opportunity for significant discussion among peers, and helped catapult the site from a simple aggregator to a destination site for many. But Bret admitted the team didn't anticipate the success these additions would have, and they didn't put as much development work into fleshing out those features.

As he said yesterday evening, "The discussion parts of our site have been almost the sole driver of our growth. It's been interesting to watch, and in retrospect, it was obvious. It was initially one of the underdeveloped parts of our site."

Also, while FriendFeed has been lauded for their highly-capable "hide" features, letting you block individual posts, posters, or services, there have been many requests for better ways to filter through the noise and find information that's most suited to your own likes and dislikes. But so far, the team is still playing catch-up. Bret added, "For the one year or so we have existed, we put less into relevancy and more into filtering tools. We are working on relevancy now. It's reflected in the different ways that people use a feed reader, as some see it as a new e-mail box and others ask to show the things that are interesting right now."

Handling Competition From All Sides

Swisher asked, as many do, if there are too many sites in the lifestreaming space, as there were too many calendaring sites in the Web 1.0 timeframe. She speculated that by the time the Web 2.0 shakeout occurs, that maybe three will survive and one, like Google with horizontal search, will end up with the lion's share.

Bret said that the lifestreaming space is a new category, and that it was "healthy" for many people to be working on "the content discovery problem". With the advent of syndication formats like RSS and social networking, he said subtle differences would be very important, and that on the Web, there is a history of natural fragmentation that enables niche sites to succeed. However, he did warn against sites adding so many features that they miss their core position. He said, "Every application grows until it has e-mail. Every Web site grows until it has all the features of a social network."

On Staying Independent

Every few weeks, somebody seemingly speculates that FriendFeed would make a great acquisition target for somebody, and the name that almost always comes up is Google, where the team's co-founders were last employed. But, as he and Paul Buchheit have consistently said, Bret again repeated the plan is not to sell the company, even if the road to business success isn't 100 percent clear.

"We're not interested in selling. We wanted to forge our own culture, to create a sustainable company," Bret said. "We have different perspectives on how to build a company of scale, and we want to build a company that scales."

Finding an Eventual, Sustainable, Business Model

Bret said the $5 million in seed funding FriendFeed raised this Spring was done anticipating the economic downturn, enabling the company to have a long runway before seeing the cash disappear. The team's hope, he said, was to find an advertising-based solution that delivers revenue without damaging the user experience. As he said, in response to questions from Kara Swisher, "there is a huge spectrum in the effectiveness of advertising," from ads that have high click-through rates, like those from Google AdWords, to the less-targeted AdSense, which delivers low conversion rates and "lots of accidental clicks." For FriendFeed, he speculated the site was "somewhere in the middle, but hopefully on the good end," where if links were mixed into the service that were sponsored, they would be done in line more with users' experience than image ads adorning the sides of the browser.

While Swisher coyly teased some of the panelists about their being "pre-revenue", Bret said one of the keys to launching a successful business model in the Web 2.0 atmosphere would be to not do so too early, and when they do, to do so in a way that is both quantifiable and analytical. "It makes no sense to try and monetize when you have only 2,000 users," Bret said. "It's too early and the early adopter audience does not reflect the behavior of mainstream users." He cited the early successes of Overture and Google AdWords as forging the quantifiable advertising market, but admitted they weren't yet sure how ads on FriendFeed would work. "We want to experiment enough to not run out of money before having to raise more, or we will have a sustainable business," he said.

What's Coming Next

Bret clearly hinted at a move to improve relevancy, and help users find signal in the noise. The team added "top" posts of the day not too long ago to help use the wisdom of crowds, and that feature could be improved. It's clear ads are coming, but maybe not immediately, as the company continues to try and scale in terms of users before worrying much about revenue. He also gave praise to the search engine that returns results just from your friends, but said it could be improved, as missing a result in FriendFeed would be much more impactful than a missing search result in Google. But he also spoke of "focus" and doing "one thing well", so it could be that those of us asking for messaging features aren't going to get our wish.

One thing you can expect FriendFeed not to do is to immediately give in to the demands from the early adopter tech geek set, who can at times be very demanding. While Seesmic CEO Loic LeMeur said the "tech geeks and geek press would have you make products for the geeks," Kara Swisher helpfully added that group was pretty small to begin with. "It's 14 slightly-overweight white guys," she offered.

My Blog Is Less a Destination Site than a Conduit

By now, we've all likely grown used to the fact that RSS readers don't often see a blog's redesign. For those who choose not to click through and leave comments, there's little reason at all to visit a blog directly any more, considering it's possible to power through dozens or hundreds of feeds in a feed reader, be it Google Reader, BlogLines or any other. With tangential services like Disqus enabling me to even engage with readers via e-mail, instead of through the blog, there's now even less reason for me to even visit my own site.

At this point, I probably, on most days, can't even tell you my daily RSS subscriber count, visible on the blog, or see the MyBlogLog widget's most recent visitors, as I'm using my blog as a way to project content outward - to RSS readers, to aggregators, like FriendFeed, Strands and Social Median, and to connect with readers via e-mail, using Disqus. It also, via RSS, powers popular sharing sites, like ReadBurner and RSSmeme. But none of those activities, with the exception of comments, require actual visits.

While it's still important to be sure the blog itself loads quickly, for those who view it for the first time, or for those who do click through RSS and choose to leave a comment, the look and feel of the blog is less important over time. I expect fewer people are typing in the louisgray.com URL and viewing pages directly, as they accumulate feeds and read more, and see the blog's UI more as a shell for content than a destination where a reader would spend a good amount of time. At this stage, the blog is simply a point in time for the content to begin its journey.

The life of a post, as always, for me anyway, starts out in e-mail, where it's authored. Then it's copy/pasted into Blogger. Then I visit the site, quickly, and ping FeedBurner. Subsequently, I refresh the blog feed in FriendFeed to keep it up to date, and send a TinyURL copy to Twitter. At that point, I really don't have to come back. Should someone opt to comment, I can reply via e-mail in Disqus, and even Delete unwanted spam or other messages.

The bulk of the activity around the blog is pretty much happening someplace else - making the number one purpose for the blog site itself to convert new visitors into signing up for the RSS feed. So if they bump into the content, via Techmeme, Digg, StumbleUpon, ReadBurner, FriendFeed, or anywhere else, they'll sign up and take in my content in the way they choose. But my blog is not the destination. It's a point in the journey. For those who are relying on ad revenue to come through via page views, this won't be good news, but that's what I see happening. For me, as I'm not trying to convert visitors into cash, this is the new reality, and we're fine with you just signing up, passing through and being part of the conversation as you choose.

I Got a Mac OS X Trojan and Infected CenterNetworks. Oops.

As a sometimes smug Mac user for the overwhelming majority of my computer-using life, virus warnings, anti-virus software and security updates were always something "those other guys" had to deal with. Using my Mac, I would even have colleagues send me attachments from their Windows machines which they thought were viruses, so I could open them up in a text editor and see what mischief they had intended to cause. But today, I realized my laptop had somehow acquired a rare trojan that does hit Mac OS X, and the results of the bugger were actually more harmful for Allen Stern of CenterNetworks than they were for me. Oops.

This morning, Allen Stern presented a new video following a press conference he held that discussed his take on the "firing" of my son Matthew, who had secured a short-lived position in CenterNetworks' San Francisco bureau. As usual, Stern's tongue-in-cheek humor and deadpan delivery were very good. The conclusion reached by his video was that Matthew would be compensated out of court with the delivery of an "I love New York" t-shirt, and I quickly commented on his site that we agreed to the settlement.

But amusingly, having posted my comment, I noticed that virtually all of the ads on Allen's site were for pills that solved erectile dysfunction, and all the banners were rotating images of Viagra, Cialis and Levitra, which made no sense on Allen's tech blog, and had absolutely zero to do with his story on my kid. So, I made screenshots, and jokingly sent a note to FriendFeed, saying, “I Just Hope the Money from these Ads Keeps CN "Up".


CenterNetworks' Ads Were All In Pill Form for Me
Allen, looking at the pictures and then back at his site, thought I was joking. But I wasn't. When he realized I was serious, this set off a flurry of calls by him to his advertising partners, swapping out of ads, and testing both on his side and mine, as we tried to figure out... was it him, or was it me?

Turns out it was all me, and separated by 3,000 miles, I was causing Allen's blood pressure to rise for no good reason. It turned out that at some point, recently, some file I downloaded hijacked my DNS settings on my MacBook Pro, and selectively overlaid his banner ads from Tribal Fusion, on both CenterNetworks and HTMLCenter, with these stupid Viagra ads. Meanwhile, my wife's laptop was fine, showing normal ads, while I was viewing the world through an odd filter.

So, I did some searching on the Web and found I had likely run into one of the few pieces of known Mac OS X malware out there, a Trojan, which disguised itself as a clean file. So, I decided to finally get some real anti-virus software to take a look at it, and found a solution from Intego called Virus Barrier, which looked a lot more Mac-friendly than dreck the Symantec guys offer. Sure enough, after paying to buy their software, installing, and rebooting, the offending file was found, masquerading as a QuickTime extension. The Intego software let me delete it, and all of a sudden, all was well. Allen's site now shows normal ads, and he doesn't carry the mark of a dope dealer.


Intego Virus Barrier Going Through My Files


Aha! A trojan has been located and destroyed!
Of course, this now raises the question... how did I get this on my machine? Some of the stories I read said the trojan could have been hiding in the form of a fake card game application, and others, as a tool that lets you watch adult videos. So... neither one of those makes sense. But despite that mystery, the good news is that I think it's all resolved. I have a product that will protect my Mac in the future if anything like this happens again, and I still know Allen Stern is on the up and up - a great blogger with a good sense of humor and values as well. It's just disappointing my stupid error somewhere dragged him through the mud through my "learning process".

Walking the SEO Balance Beam

Guest Post By Cyndy Aleo-Carreira (E-mail / Twitter)

There's a battle brewing, and it's between SEO advocates and content creators who prefer a more organic growth to their sites. On the one side are the SEO abusers who litter poorly written content with an oversaturation of keywords, making content unreadable, and on the other are those who pay no attention to keywords, don't realize that you can add the Page Rank indicator to the Google Toolbar to check the rank of an individual page, and write whatever they want, with no thought to subject focus or search results at all.

There is, however, a fine balance that can be struck between the two sides, and that balance can be achieved with a focus on the reader rather than on the stats. If I had my way, I'd write whatever I wanted with no thought to the dreaded search engines, but if I did that, I probably wouldn't get paid for my work, so I try to keep a constant eye on that balance.

Much like advertising, overuse of SEO techniques is becoming an annoyance to readers, and if someone were to develop a plug-in like AdBlock Plus that could filter out content that was oversaturated with keywords and internal links, people would download it by the thousands, if not millions.

Still not sure what I'm talking about? Let's take a look at this Mahalo page for a spoof video. You'll notice that in a 68-word Guide Note, there are 13 internal links to other Mahalo pages. Some links are split across lines, making it look like even more. While it may look good to a search engine spider, it looks unreadable to the casual visitor. How many users will actually click those links to find more information? How many will instead click out of the page and move onto something more user-friendly?

Walking the balance beam when it comes to SEO involves a common sense approach: keeping the keyword in the URL, title, and text, but not beating the reader over the head with it just to make it more obvious to the search engine spiders. And sure, offer an internal link for something that the reader may want to see for additional information, but don't link to every single possible page on your site in an attempt to plump up your page rank and search engine appearance. Your readers will thank you, and hopefully, send others.

Why Disqus Is Winning the Web Comment Battles, and What's Next

Tonight, I was lucky enough to have dinner with Daniel Ha, the CEO and co-founder of Disqus. One of the advantages of being in the Silicon Valley is that in many cases, I can actually engage with and meet the people who are moving the industry forward, and while I don't consider myself a big-league hob-nobber, the occasional social visit can be rewarding. I won't jeopardize future meetings by giving away the company store, but I definitely came away from the evening feeling even more committed to Disqus and the company's strategy than I was before.

As you already know, I first added Disqus to my blog with Daniel's help, after finding I was unable to integrate the service into my Blogger template. He went above and beyond the call of duty to get me up and running, doing such an excellent job that the effort was noted by Mashable.

This customers-first attitude shown on the Web was evident off-line as well. Daniel more than once apologized for the brief downtime Disqus suffered last Friday, saying that he had awakened to a swarm of e-mails from frustrated users, not to mention my post, and said that we were right to call them on it, as Disqus comments are now such an integral part of our blogs. He assured me the team knew the issues behind it and was working diligently to make sure another similar outage would never occur. Disqus' popular sidebar widget was to blame, putting a great deal of strain on the service, which has since been lessened.

Also, during the meal, Daniel asked me a question that he says he loves asking users, "How can we make Disqus work even better for you?"

Had I been properly prepared, I could have brought an index card along with responses at the ready. Duncan Riley, for instance, wants trackbacks and FriendFeed integration. I asked for better statistics and analytics, and had questions on how older posts were displayed on my Disqus dashboard. But the truth is that I'm already quite happy with Disqus, and have grown to expect to see it on other blogs, making myself less likely to comment on other sites that don't offer the centralized comments feature.

On a personal note, I was struck by how young Daniel was. At the old age of 31, I'm now reaching the point where just about every Major League Baseball player I like is younger than me. But the CEO of a company I think could have a big impact on the future of the Web being 22, and a UC Davis computer science graduate just this year? That's not fair, and I'm not used to it. Coincidentally, my youngest sister also graduated from Davis on Saturday, sharing Daniel's class year.

Daniel started Disqus in 2007 with friend Jason Yan while in Davis, and this month, doubled the team, adding two new coders, Andrew Badr and Devin Naquin. (See: The New Guy and Hello, world!)

Andrew's already busy letting people know about upcoming features, promising the addition of trackbacks "sometime in the next week.", on the Oracle AppsLab blog. He also answers many people's fears as to the portability of the data, saying, "Better options for import and export are in the works, and will be part of our next major release."

As I wrote at the end of May, Daniel has helped lead Disqus to the forefront of blog comment services in a short time, partly due to his aggressively pursuing relationships with partners. While some companies have targeted Disqus with competitive pot-shots, Daniel said that having others in the field helps to reassure him that it's a good market to pursue. If nobody else was interested in the space, he would undoubtedly be wondering just why.

Disqus is well-known to be funded by Fred Wilson with Union Square Ventures and Paul Graham with Y Combinator, among others, and while some VCs may try to demand immediate revenues or even profits from even the smallest of ventures, Disqus is not yet under such pressure. They've definitely had talks about how to monetize and start bringing in money, but if you thought they were about to start with advertising, you'd be wrong. Disqus will not always be a zero-revenue company, but Daniel says advertising's not in the plans.

For a service that's already got what I believe to the best solution with threaded conversations, a strong GUI and centralized activity, Disqus is continuing to work hard to maintain their lead. Andrew's comments point to near-term release of importing, exporting and trackbacks, and Daniel seems to have an extremely level perspective on what could be a challenging environment for anyone, let alone a 22 year-old entrepreneur. I believe we need a lot more people like Daniel focused on delivering a great customer experience with real benefits, who are less focused on the day to day fights between competitors than they are on getting the service perfected.

ReadBurner Podcast Talks Comments, Twitter, FeedBurner Ads

After a few months participating in the Elite Tech News podcast each Sunday evening, I was excited to be invited by Drew Olanoff and Adam Ostrow of ReadBurner to participate in their ReadBurner Weekly Live podcast this evening.

Although I already knew the two guys were sharp from my previous interactions with Drew and Adam via e-mail, Twitter and seeing their blogs, it was absolutely a pleasure to talk with them both about the big issues of the week. My only regret from the call was that Skype and TalkShoe didn't get along all that well, so when you listen, you'll hear me drop off the call four separate times. Frickin' Skype...

Topics included:

• Once again, the diversity of new places to make comments, away from the original blog.
  
• The integration of AdSense and Feedburner to post ads in RSS.
  
• How to bring RSS to the mainstream?
  
• Twitter's continued uptime issues.
  
• Continued improvements to ReadBurner, including chiclets and the addition of a "Breaking News" feature.
  
• What would Techmeme look like without content from the Techmeme leaderboard? (101+).

You can find the archive on the Official ReadBurner Blog or download the MP3 file directly here. It weighs in at 27 megabytes. Be sure you "fast forward" five minutes, as it appears the recording was turned on well too early.

Also, as for the Elite Tech News podcast, the team completed another successful call Sunday, with guest panelist Tamar Weinberg. You can find it on Mashable: Elite Tech News #10: Crickets.

Most Bloggers Don't Deserve Any Ad Revenue

It's routinely shocking to me that so many bloggers think they should try and make a profit from their Web site.

Urged on by the success of mega blog networks like TechCrunch and spurred forward by stories from ProBlogger, or corner cases like Dooce.com, Daily Kos and others, an inordinate amount of people are hoisting ads on their blogs, from Google AdSense, from AdBrite or Federated Media, in the hope of turning their daily rantings into big dollars that could possibly change their life. It's no surprise that blogging for many has the shiny look of a "get rich quick" scheme, when actuality is far different.

Their hopes are misguided, and for most, a serious reality adjustment is needed.

(Also: The Web Advertising Bubble Has Got to Pop, Advertising for Bloggers Has to Change)

Why and Where Do Advertisers Advertise?

Advertisers post ads where their potential customers may be lurking. If the demographic you serve doesn't match the demographic the advertiser is looking for, then it doesn't do either of you any good to hustle for leads that won't close.

Advertisers are looking for high traffic areas so their ads can be seen by a wide audience, giving them the highest number of impressions and potential for brand recognition.

Advertisers will pay a premium, be it cost per impression, cost per click or cost per conversion for those sites that can bring the highest quality customer, often found on sites that offer significant differentiation, whether that be popularity, reputation, quality of content, or ownership of a specific niche that nobody else has covered.

Where Bloggers Are Going At it Wrong

Most sites are not big enough, traffic-wise, to generate significant revenue. Assuming a mid-size blog gets about 1,000 unique visitors per day, and an ad delivers 1 cent per impression, you're only talking ten dollars a day. If you're instead getting 25 cents for a click-through, you would need 4 percent of your visitors to click on an ad to achieve that same ten bucks. And advertising click through rates are usually in the low tenths of a percent, let alone full percents, so most numbers would actually be much less than this. Even if you move any of the dials up by a factor of ten, you're not talking about life-changing money. The Web is full of stories around bloggers who took months to get their first $100 check from Google, the barrier for payment.

Most sites don't have real significant differentiation interesting to an advertiser. If you look in the tech world, just how many tech bloggers do we really need? How many of them are breaking stories or offering a unique angle for a unique audience that nobody would serve if they completely pulled up stakes and disappeared? Not too many. With the exception of about the top five or ten blog networks, no tech blog offers enough of a pull that an advertiser would consider them a must to invest with. And even among the top networks, the rush to publish is becoming silly to watch, as my RSS feed reader will fill up with near-identical stories, usually written by people who haven't done any original reporting beyond reading a press release, other blogs, or listening to a financial earnings call, if they're really serious. (See the graphic on today's acquisition of FareCast by Microsoft, for example)

On the E-Consultancy Web site, this issue is bluntly addressed:
"Most bloggers don't make a cent from blogging and the global demand for mostly poorly-written blogs about technology news pales in comparison to the global demand for music."

Yet, some bloggers act as if it's their God-given right to write, post a few ads and start raking in cash. In my opinion, content is absolutely cheap. It costs nothing, except time, to put text on paper or computer screen. In the world of journalism, finding willing reporters for newspapers hasn't really been much of a problem. Instead, there's a dearth of readers, and advertisers, which the Web has helped accelerate, as paper circulations dive and reporters are laid off. And while Google is reporting great earnings, the same rules will hold true online. Bloggers are a dime a dozen in most cases. Those that offer non-unique blogs without significant audience or differentiation might as well not exist as far as ads are concerned. Delivering more posts per day won't fix that. Following the big, successful networks won't do that. Spamming and trackback abuse won't fix that.

Services Offer Real Value, Bloggers Don't

Sometimes bloggers on the periphery of an industry get jealousy over seeing the dollars thrown around from mergers and acquisitions, or funding. It is human nature to see when a service might be bought for millions, that fans of the service or bloggers covering it feel they are entitled to a "share". But Web services like Facebook, Digg, or TechMeme are in themselves destination sites that are sticky, pulling in consistent viewers and repeat visits, made even better when these sites have personal, demographic information that helps tailor ads and messaging. These Web services are adding real value to the Web by changing the way we interact and communicate. Bloggers, myself included, are not. We are more like consumers than producers in this case, and the last time I checked, consumers pay, they don't get paid, no matter how excited we might be about a product.

The Focus Must Be Away from Ads

In a recent discussion on this topic, a blogging peer of mine said, "What's "fair" to me is making enough to cover hosting costs and buy myself some toys every once in a while. I do that, which is enough. But if I couldn't even cover hosting costs, I'd stop blogging."

And to me, I don't possibly see how the word "fair" can come into play. As bloggers, the ad industry, and our readers, truly owe us nothing. If we have opted to start writing, it is on our own choice. What we write about? Again, our choice. Where we opt to be hosted? Usually our choice. Our page layouts? Our choice. Our blogging platform or schedule? Our choice. So how does "fair" come into it? The goals must be somewhere else, whatever they may be for the individual, be it a hobby, setting up for the "next" job, continued writing practice, or enjoying the community.

There are millions of bloggers out there today, screaming for their "fair" share of the advertising pie. And while Google rakes in cash from vendors by the billions, some smaller bloggers are crying foul at the perceived inequalities. But it's more likely they are getting exactly what they deserve when it comes to ads - pennies. They would be better served to pull the ads off their site altogether and find different ways to make money, because for most, blogging will never get them what they want.

The Web Advertising Bubble Has Got to Pop

A few weeks ago, while having breakfast with well-known Silicon Valley author, Emanuel Rosen, in Palo Alto (more on that later), I said that I was very concerned that all the companies chasing after advertising dollars, from blogs carrying AdSense to startups, all the way to the mighty Google, will be dramatically impacted by what I see as an obvious crunch in the online ad market. The more I think about it, the more obvious it becomes to me that the ad-driven economy, both offline and on, could soon be in dire straights, and companies hoping to cash in need to think of new revenue targets - quick.

I can't remember the last time I clicked on an online ad. Whenever possible, I am running ad blocking software on my browsers. I've learned to ignore AdSense blurbs that sneak through, and any time I'm forced to see an interstitial ad before reading a story, I'm clicking "Skip this Ad", or right-clicking it and adding to my ad blocker's memory.

Meanwhile, I find it painful to watch television without my TiVo. If watching something live, we mute the commercials, and either get something elsewhere in the house, go back to the Web, or pick up a magazine. I just do not want to be sold to.

To me, the most effective way to reach me as a consumer is through buzz, to hear genuine excitement from others who are trying a product early. If they like it, I'll see it in their blogs, in their Del.icio.us links, Google Reader shared items and FriendFeed. I'll see it on Digg or TechMeme. I'll see people using it and showing it off at the office. But I'm not more likely to purchase a product because they purchased some run of site banner ad space.

As I'm doing my very best to avoid advertising, I have to believe a significant number of others like me are doing the same thing. If you (safely) assume that the more educated, more technologically-savvy among us will be the first to block Web ads, then one of the most prized demographics for marketers will be unavailable. Then, as others latch on, the click through rates on ads will dry up. Total revenue from pay per click ads, from Google and elsewhere, will go soft and then crater. Advertisers will decrease their rates per click, and decrease their total ad budgets, moving money somewhere else, to more viral, buzz-driven, targeted campaigns. And while the Web has done a fantastic job about turning a per impression model to a per action model, proactively shunning the medium altogether makes you a deaf audience.

I'm waiting for a major browser manufacturer, like Firefox, or a smaller one, like Flock, to come bundled with ad blocking software, making it even easier for the non-tech savvy customers to start blocking banners from day one, not just stuffing the pop-up variety. It might not ever happen. It might be that there's too much pressure from advertisers and marketers to keep things status quo. I certainly don't expect Microsoft to be the first to adopt it with IE, for example. But can you imagine what would happen if they did, and the unwashed masses found their default browsers blocked ads out of the box? Euphoria.

Think I'm nuts? Look at what's happening out there. While many Web 2.0 companies are making ads their sole revenue target, eschewing subscriptions or chargeable paywalls, see all the news about how the ad-driven economy is showing cracks.

Center Networks: I Want My Slice of the Pie: A Look at Startups and Ad Spending

"We have thousands of sites competing for a piece of the advertising pie today… the problem is, innovation is outpacing ad spending at this point".

Read/Write Web: There's No Money In The Long Tail of the Blogosphere

"Whatever monetization means the blogger in the long tail settled on, be it Google AdSense or Amazon affiliate codes, it can only work on large volumes of traffic. AdSense works for Google because the odds are in its favor - it is aggregating small amounts of traffic across the entire web. The math works for them because it is based on the massive scale of the web. It similarly works reasonably well for the sites with large amounts of traffic, but it fails for smaller publishers who have low visitor counts."

Mashable: 15 Reasons Facebook Isn’t Worth $15 Billion

"Research firm eMarketer projects that by 2011, ad spending in the United States on social networks will reach only $2.5 billion. While I personally believe that most projections from research firms are BS, it’s worth noting that most of the time, these projections actually exceed the numbers that are realized."

Silicon Valley Watcher: Reasons Why Media and Bloggers Should Not Run Google AdSense

"Running Google AdSense will return pennies per click, you cannot make a living off of AdSense. But by running AdSense you are undermining your own efforts to charge a meaningful amount for online advertising. By running Google AdSense you have to accept the pricing of the advertising as determined by Google's AdWords advertising network."

eMarketer: Online Ad Spend to Hit $42 Billion by 2011

"While the current total media ad spending forecasts reflect economic anxiety, a downturn will affect online ad spending... (and) because of the credit crunch and related economic fallout, Internet ad spending will not increase as much in 2007 and 2008 as analysts previously expected"

As a consumer, I recognize Web properties and media need revenue. I'm willing to pay for access in many cases. I don't always assume things are free. But if you're running ads, it's very likely I'm not seeing them, and neither are a lot of people I know. The question is, will there be enough of us and enough innovative tools built to avoid ads that the big giants like Google, who to date has lived almost exclusively through ads, without monetizing its other products, start to have serious revenue trouble? And if they do, how far does that domino effect go? If I were running an ad-driven startup or media company, that question would be keeping me up at night.