Web 2.0: Start-ups plead for deals and cash from Big Media

Following my post yesterday on the melting down of web 2.0. . .

Here’s the FT‘s Kenneth Li on how executives at US media companies are receiving “increasing numbers of pleas from entrepreneurs seeking funding or outright purchases, as once-plentiful capital dries up for those seeking a second or third round of investments”.

Li quotes one executive on a proposed acquisition that was offered to a media company in September. The prospective price was one-fifth of the $100m valuation attached to the start-up a year earlier.

According to Noah Wintraub, who runs internet and digital investment banking for JP Morgan in the US, deal values previously calculated on a multiple of profits two to three years in the future, are now priced at one to two years.

George W. Bush would probably suggest that this sucker is going down.

By contrast, Chris Anderson, editor-in-chief of Wired, doesn’t seem so sure. Anderson is a big proponent of the 2.0 tactic of giving things to consumers for nothing in the hope of making money from ads or “freemium” offerings.

Anderson is quoting a couple of sources who reckon that “free” will flourish during the recession. Well he might: Anderson has a book coming out on the subject imminently. In fact, it’s probably already in production.

Given the long lead times involved in book publishing, a re-write seems out of the question. . .