Banking on Obama for a bailout?

The President Elect has had quite the busy week. He arrived in Washington, got his children to their new schools, had his Twitter hacked and now has the not so small task of establishing an effective economic recovery plan, amongst his other trivial tasks of taking over the presidency. So what will happen next year? With an estimated 7 trillion dollars lost in investor’s portfolios last year, which is not something that magically reappears, his plan for recovery will be a challenging chore indeed.

As companies strive for survival some changes already occurring may impact services you now receive free of charge. Organizations built on ad revenue models in lieu of charging customers for the services they offer are now being hit with declining revenues as budget cuts are exercised and ad rates drop in general greatly reducing the revenue potential. Social networks for one come to mind. In most cases, the principal revenue needed to support infrastructure and provide tools to use their services are all funded by ads. This is a good thing for the consumer as you get to take advantage of those goodies without having to pay a monthly fee. Tough decisions will be made by each individual organization to determine whether to change their business model, but with so many people affected by the economic situation it is doubtful that people will willingly start paying for things they are already receiving free of charge. It’s human nature that we are not happy when things are taken away.

This change will be, I hate to say permanent as there is little permanent on the internet, but it will be a lasting one. It’s the same problem faced by newspapers and other print distributions, once ad revenues, which make up a substantial amount of their income, drop to a point they can no longer cover their overhead a decision needs to be made to either replace the cash stream or close the doors. With less investors willing to fund organizations with dwindling ad revenues it will become more challenging to keep them going, worse yet it will prevent new services from being developed in general.