The new “economy of free” continues to push content creators of all types to providing free goods and services, and web 2.0 companies are challenged in trying to figue out how to not just live on VC money and actually turn a profit.

Matt Maroon thinks that the free economy will eat itself, and has posted a very insightful post entitled Bubble 2.0 that deserves a read.  Specifically, Matt is talking about software and related web 2.0 companies, but regardless of what you are selling (or giving away for free) I think Matt’s alternative view deserves consideration as well.

I think that at the end of the day, much of our new free culture is going to turn out to be just plain unsustainable. I’m predicting that we’re going to see a large number of high-flying startups crash, just like we did before. They aren’t currently flying as high or as conspicuously as last time, so the crashes will be much more graceful, but crash they will. This time they won’t depress the public markets, at least not directly, just hedge funds and private equity.

I have my own opinion, and think free definitely has a place in the business model, but I want to know what you think.  Can companies turn a profit on “free?”

Several companies found out today when Amazon.com’s S3 service experienced an outage and left applications without their data tier. I first experienced it this morning about 8:30 EST when those of us on Twitter noticed that avatars were not loading. Later reports of missing images on Facebook, and other applications started rolling in as startups and application developers realized their apps were broken due to the Amazon S3 outage.

So, what to do when you rely on the cloud? Simple – don’t rely on the cloud completely.

SmugMug’s Don MacAskil has it right, and discussed his approach on TechCrunch’s report of the outage:

We do rely on S3 for our primary storage, but we do maintain our own “hot cache” of data in our datacenters, too, which is less than 10% of our total storage. Our customers weren’t affected by this morning’s outage.

PBwiki’s Nathan Schmidt agrees:

Never build your architecture to require low-latency, high-availability access to S3 or its competitors, because you won’t get those – that’s not what it’s for, that’s not what it’s optimized for, and you’re never going to be able to peel back those layers of abstraction and long-haul network.

(Photo credit akakumo)

This is a sad time for the web. It’s as almost somber as the time just before the last bubble burst in 2000. I was working in PR with dot-com startups at the time and the way I feel now is how I did back then. I wish I didn’t, but I do. Something needs to be said. Even if no one listens or cares what I think.

Social applications are exciting, and the buzz level is high to be sure.  I have been guilty of being a fanboy from time to time, but try to keep things in perspective.  Is it really as bad as Steve thinks?

What do you think?

Photo: Al-Fassam 

• TitleZ
• What Should I Read Next?
• MixBook

I fairly sure that these 50 are the short list. What this means, of course is that book readers are alive and kickin’ despite the rumors of their death (3 out of 4 Americans read books) and like many others they are forming networks and relationships online. This is dead obvious to those of us involved the social networking, but as publishers we still need to understand how to connect with these groups without resorting to what I’ll call “traditional” PR and marketing efforts.

Some publishers are already engaging these groups. If you are a member of one of these book networks, what have you observed with respect to publishers being involved?

Image: Amaztype

Without a grasp of what makes a good site compelling and successful, it is implausible that a publisher could “leverage” the new technologies to worthwhile benefit without wasting the ample opportunities before them. If you haven’t ever mashed-up a video on YouTube, what makes you think your readers will?

Peter, can you read my thoughts?

(Via Joe Wikert)

2008: Firefox 3.14159 ships (those geeks at Mozilla just won’t be able to help themselves, and the resulting flamewar and developer resignations over whether to call it “PiFox” or not will lead to it being dubbed “PyreFox”). This version adds offline support to Ajax web applications. People will want to call the result “Web 3.0″ but that term was claimed in advance by the Semantic Web so the blogosphere will quickly decide to call this Web 2.86 but the period will be quickly quickly lost (to the condemnation of purists) and the media will refer to “Web 286“.