Everything is a Bubble

Paul Kedrosky recently mentioned a report about how all markets are a bubble. In the report it states that the two conditions that cause a bubble are strong liquidity and a great outlook. The report also talks about how success kills itself

There is nothing that suppresses the success of a brilliant new idea more completely than having 12 nearly identical start-ups.

Everything is a bubble. If you are successful people will emulate it. If you create and aggressively market a half dozen sites in the same vertical you not only compete with yourself, but you also create a new type / system / format / category of spam that others will emulate and authority systems (such as search engines) will work to reduce.

Just how people learn to ignore ads, they also learn to ignore abused content formats. Andy Hagans destroyed Digg.

What keeps Google strong is not their search relevancy, it is their ad formats and their ability to shape public perception.

Search engines also redefine what they are looking for by benchmarking information quality. Do search engines really want to promote a bunch of thin content sites that are easy to spam? Not likely. These sites act as testbeds for features that search engines clone, but eventually most of them will die.

Content and advertisement formats are not the only types of information bubbles. All of this rides on how people use language, from spam filters, to ad targeting, to the perception of fair use, to syndication guidelines, to deceptive offers:

Stanford Group this week issued its own bulletin, stating "we believe the FTC is investigating deceptive Internet advertising by several companies, particularly relating to offers claiming or implying "free" products."

right on through to general public deception, ala Frank Luntz:

Luntz was quizzed on his prior advocacy of the term, 'climate change' as opposed to 'global warming', given the emotional nuance of the latter term.

You'll see that both terms are used by Australian Internet users, but 'global warming' is by far more referenced. Further search analysis is telling, revealing that searches for 'climate change' are more likely to result in visits to News & Media and Government websites; while users more commonly visit Education and Environment online industries when they search for 'global warming'. Could it be that 'climate change' is in fact now the more emotional term, given its prominence in the media?

If you know everything is a bubble, and are building for the long-term, it might make sense to look beyond the current fashion.

Stock market was BIG... everyone became a broker trainee... it crashed.... real estate was BIG...everyone was a realtor/trainee/mortgage broker... it's crashing....what's next?

What is out of favor now will likely come back in fashion at some point, as noted by Alan Meckler:

I still contend (even with the heavy push for user generated content) that high quality, wholly owned content still has a major role to play on the Web. When you own content as we do, then opportunities continuously present themselves. Great content also provides an environment to create new lines of related business.