Is it Time for a Web 2.0 Bailout?

Now that Washington has bailed out the financial services, insurance and auto industries, isn’t time to rescue the investors in Web 2.0 companies?  Sure they funded businesses with limited (or even no business models) but here is my logic:

  • These companies just need time to be merged with others with more traffic and/or advertising revenue
  • The damage caused by the failure of someone like Twitter could be severe and extremely difficult to contain
  • Pension funds often invest in venture capital funds and we wouldn’t want retirees to be at riskSocial Media Bailout
  • The bailout could be structured as a loan until they can find a deep-pocketed acquirer or revenue model
  • These small business owners shouldn’t be penalized for the predatory lending of a few greedy investors
  • Joe the Tumblr shouldn’t have to pay to share his status updates
  • Americans would face lower incomes, lower home values, higher borrowing costs for housing, education and other living expenses, lower retirement savings, and rising unemployment (OK, that was taken directly from Senate testimony by New York Federal Reserve Bank President Tim Geithner and is not related to this post)
  • If we lose online friendships then the terrorists win (watchout @amandachapel…)
  • There would be chaos on college campuses across the country if students didn’t have a place to share their drunken photos
  • Thousands and thousands and thousands of social media bankruptcies would create as much systemic risk as one Facebook or Myspace faliure

My guess is the bailout would cost less than $25 billion over the next five years to keep these companies solvent and Valleywag full of anecdotes about Web 2.0’s young and vapid.

I need more content for my impending congressional testimony.  Any suggestions?

Disclaimer: This post brought to you in part by @limeduck’s irresponsible use of cough medicine

Author: Frank Days

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