Web startups still throwing dice at ad models

NYT’s Claire Cain Miller:

During the dot-com bust, as the online advertising market dried up and the Web companies that had been buying most of the ad space went bankrupt, the people who start and fund companies in Silicon Valley began questioning whether Web sites could survive on advertising alone.

That moment of doubt didn’t last. The ad market revived and free Web services blossomed. But now, as advertising shrinks once again, entrepreneurs and venture capitalists are desperately seeking new sources of revenue.

Not only is advertising shrinking, but there is still inventory flowing into the online marketplace.

The constituents should have been begging this issue a year ago.

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