As the American economy continues to falter, I wonder how it will effect the internet. Real businesses are being hit hard by rising gas prices, which have resulted not just in higher product costs, but in decreased consumer spending as well. But what about virtual businesses? Look at IGN. IGN is a high traffic site that offers no actual goods or services, just video game previews, news, trailers and screenshots. The entirety of their income is based on ad-based revenue. But the effectiveness of internet advertising is questionable at best, and with companies looking to cut costs, internet advertising could soon become one of the victims of the American recession. If that happens, two things could potentially happen:

1. sites will be sent into a downward spiral, where reduced revenue results in staff cuts, resulting in less content, resulting in less traffic, resulting in the site losing desirability to adveristers, resulting in further site budget cuts, eventually leading to site shutdown.

2. You will see various sites get subsidized or bought outright by their advertisers. In the case of IGN, for example, you could see them bought by MSN or Konami, thus resulting in the advertiser having full control over how its products are depicted.

I'm not sure which one is worse...