Analysis and discussion of issues that impact business

Interesting article by Brad Stone, Newsweek reporter, reprinted on MSNBC.com. Sites like MySpace.com, Skype.com and others now have a new kid on the block to think about. It's none other than AOL.

AOL is not the only brazen imitator. The Internet is suddenly crowded with me-toos, copycats and also-rans. You can't throw a chicken-satay appetizer in Silicon Valley these days without it landing at the launch party for, say, a new social-networking firm that vows to out-myspace MySpace. Similarly, the success of YouTube and Google Video has sparked an explosion of video-sharing sites and the supremacy of iTunes has triggered an eruption of music services. Business has always thrived on competition, which leads to lower prices and better products. But the proliferation of shameless copycats on the Web is a bit worrying too. We saw such an outbreak of unoriginality during the first Internet boom—and we all remember how that turned out.

But there's some very simple reasons for this proliferation.

There are 2 main reasons that explain this phenomenon, and both of them begin with $$.

The fact that everyone is starting such a site suggests that an online media-sharing service is neither relatively difficult or expensive to build. So the early audience lead and brand strength of YouTube and Google Video is all the more important. But this also means that potential acquirers—the News Corps, Googles and Yahoos of the world will just as likely build and maintain such services themselves, instead of swooping in with the expensive buyouts that all these entrepreneurs are hoping for. Inevitably, a shakeout is coming—either in the form of site closures, or a much larger bursting of the bubble that could rival what we saw in 2000. 

In addition, it seems the dream of an online advertising bonanza still lives.

So all these entrepreneurs expect online ad spending to accelerate, which is why they are moving aggressively, and with such little creativity, into all the same genres. They want to be there, hands outstretched, when Internet advertising really takes off. But just watch as they all get blindsided by someone who is thinking outside the box.

I can't disagree. In all my years in advertising, I wish I had a nickle for all the "great ideas" that were going to result in huge advertising dollars.

So it looks like Silicon Valley is a sea of crossed fingers right now. Not my idea of an innovative business strategy.