Ad sales down, can I get a country license for YouTube?

 Sales of Web advertising have fallen so far that Internet start-ups are looking for new business models. Absent my crystal ball, it's hard to know where this will lead. But in light of challenges the big content-sharing services are already facing in their race to global ubiquity, I can easily imagine them offering "country licenses" to a few key players. Here's the news:

 

Since 2004, venture investors have put $5.1 billion into 828 Web start-up companies, and most of them are supported by ads, according to the National Venture Capital Association.

Now advertisers have cut back their online spending. So Web start-ups are searching for new ways to make money, like selling real, or virtual, goods or asking customers to buy subscriptions.

And venture capitalists who envision a sale of the company in the public markets are encouraging these efforts. Roger Lee, a partner at Battery Ventures who invests in digital media start-ups, said he considers only companies with one or two revenue streams in addition to advertising.

“Current troubles in the advertising economy are forcing people, out of necessity, to ask really hard questions about how do I build a profitable business,” he said.

As I've already mentioned, that ad-based model doesn't work so well in developing countries, including countries with large and growing tech-savvy middle classes. Advertisers--or advertisers' collective reticence--is impeding access to YouTube, Facebook, MySpace and other "free" services in India, Indonesia and many poor countries with high demand for Web-based content.
Well? What of it? 

For most of the past 8 years, the private-sector Web ecosystem has tended toward free content funded by targeted advertising. (And thank you, Google, for that!) The big media-content players like MySpace and YouTube are using ad revenues and user-developed-content models to compete for global market share and--eventually--the cutting off of investment capital to their competitors. (Who, for example, would advertise on Vimeo in Indonesia, when YouTube has the global brand for video sharing?)

It's impossible to guess where a global Web-ad slow-down is going to lead (or even if it will be sustained). But I can easily imagine forward-thinking governments such as Rwanda's looking at the big content-sharing services as components in the development of their nascent, tech-supported knowledge economies and electing to buy "country licenses" for the most critical social-networking and content-sharing tools. (Sorry, Vimeo. Again.)