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Web 1.0 is model when planning for Web 3.0: ad:tech panel

SAN FRANCISCO – Online advertising is still in its infancy in terms of revenue even as Web 2.0 takes over, according to executives on a keynote panel at the ad:tech San Francisco conference.

In a keynote called “Old Warriors Don’t Die!” executives from the old wave of the technology craze in the early ’90s compared Web 1.0 developments of the past with today’s Web 3.0.

“We are still in the early stages of media life,” said Bob Davis, managing global partner at Highland Capital Partners, told delegates Wednesday evening. “How to monetize it is still to be determined, because relative to audience, the dollars created around Internet content is still relatively small.”

It is important to look to the history of the Internet when planning for the future.

“In the early days it was about building a good business,” said Gene DeRose, co-founder and CEO of House Party Inc. “The craziness came in ’98 and ’99, when there was a lot of money to be made and that’s when the bubble happened.”

Some Internet companies got started and didn’t realize the flaws of their business model until they were faced with challenges.

“We knew that we were in the business of building Web sites, but we realized that to build the Web sites we actually had to develop the server,” said Jonathan Nelson, founder and chairman of Organic Inc.

The user has been in control since the early days, particularly in the way they shape how media is consumed. This influenced the revenue model online.

“The ad model became dominant because that’s what consumers accepted and wanted,” said Kevin O’Connor, founder of O’Connor Ventures. “The subscription model didn’t work because consumers didn’t want to have to pay to go on sites.”

What’s next for the online space?

“It will be more of the same, but we will find ways to reduce the clutter,” Mr. Davis said.

His fellow panelist had a different take.

“The Internet has now passed everything in how much media we consume, so all the work in the next few years is about tapping into that, which isn’t necessarily about monetizing,” Mr. Nelson said.

“It’s not the MySpace and the YouTubes that are making a lot of money for companies,” he said. “It’s the ad networks and the groups that are utilizing the long tail that are making [money].”

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