Quietly, an entire Web 2.0 economy has blossomed. The Web sites and blogs that cover Web 2.0 - sites that I really love - are largely supported by ads from startups that also are hoping to capitalize in the rising interest in online advertising. This creates a vicious cycle that's unhealthy for the earning potential of bloggers who cover Web 2.0.
Once again I turn to history as my guide. Back in 2001 Yahoo faced a similar problem. It was too dependent on dot-com advertisers. Yes, times were different then. Yahoo was a big company with big infrastructure. Today, to publish, the cost of doing business is zilch.
However, what's not different is that startups advertising on startups spells trouble. You can't sustain momentum. If the economy hits a speed bump it will upset the apple cart enough to cause the Web 2.0 advertising economy to sink. And while it won't spell the demise of these popular blogs, it might mean these bloggers will need to return to their day jobs.
The solution, just as with investing, is to diversify. The ad-supported Web 2.0 blogs and communities like Reddit and digg must - I repeat - must find a way to diversify their revenue streams beyond Web 2.0 related advertisers if they are to thrive as businesses. Some are doing this nicely. Others have their work cut out. Root for them.
