The answer is that the web is changing. Yes, the web became popular because of an apparently inexhaustible source of free content, primarily information and entertainment. The difference now is that the use of the web is not simply logging in to an ISP and and surfing sites with your browser.

The web is now comprised of multiple points of contact and access for any given individual. A company that simply focuses on a single point of presence for their content cannot reach the percentage of web users that it would like, nor can they fully leverage the ever-widening social nature of the internet.

These dynamics create a need for distributed content and virility. The primary targets for widgets right now are high-concentrations of eyeballs that are highly social and like to share content (e.g. Myspace, Facebook, etc). However, this distributed content can be pushed/pulled to your mobile device, your web browser, your computer desktop, your television, your set-top box, your gaming console, your watch, your ATM and within the next decade or so, the tabletop at your favorite restaurant.

I think many people see the content, but fail to understand the value of the underlying user network, infrastructure and toolsets required to facilitate this new digital media model. The companies that dominate this space early on could potentially change the face and scope of the internet as we currently know it.

Widget ads are nothing more than rich media banners with a “grab this” button.

My guess is Pointroll and Eyeblaster will each gobble up a widget maker to extend their rich media ad serving reach (probably Clearspring, Slide or Gigya) and then we’ll get to deal with lack of advertising spec standards for widget ads across social network sites. The rest will go out of business, just like when Eyeblaster, Pointroll, and Unicast trounced their rich media competitors in the early 2000s.

And then AOL goes out of business. Oh, wait…

Create or join a crunchie’s chat group at http://groups.im/

They are going to be everywhere and while many will utilize sponsorship and advertizing to monetize, there are thousands of day to day uses for widgets. it’s all about utility. If they provide some form of usefulness to a person, they will be kept and reused.

It’s an absolute catastrophic meltdown of biblical proportions in the financial marketplace. We may not see same the type of money flowing environment for YEARS! Companies have to be trim down now and become really really lean to make it right now.

Another reality, I think is that the primary appeal of the internet is the availability of free services\content. Once you start asking people for credit card or paypal payments web users simply go elsewhere (excepting porn and dating sites). So that leaves advertising as the only revenue model. In all my years on the web I have never ever clicking on an online ad all the way through to a completed purchase transaction.

Day after day I read about all these little tools to help manage your contacts, blog feeds, Social Network info etc etc. Are significant numbers of web consumers ever going to be willing to pay for this stuff? Other than stuff that directly helps businesses make more money or the before mentioned Porn and dating sites are people ever going to be willing to pay for web based services\content? 36 million for a company that distributes widgets? Huh? Once advertisers wise up and realize no one is buying stuff as a result of their online ads how are these companies going to survive?

Feel for anyone doing it tough, but, c’mon – widgets? Advertising supported? That’s got to be as attractive as collateralized debt obligation backed by WuMu and Lehman…

In Europe we see the same down scaling as we offer a lot less Jobs on http://www.Spirofrog.de in these days.

But the downturn will Stop mid 2009 IMHO

Also, there’s not a real purpose they serve beyond being something “different” to play around with. Like the whole “virtual worlds” craze in late ‘06/early ‘07…I mean, maybe 10-15 years now it’ll be more useable…but for now, it’s much easier to email or IM someone than try to meet them in a 3D virtual environment.

I just really wish all these gimmicky small-fry web companies would stop popping up. You can’t monetize everything (and even big things/trends aren’t immune to this *Youtube*) and in the tech world, offline or online…if your app/product/service doesn’t make computers users’ lives easier or better in some significant way, not only will they NOT use it…they most certainly won’t ever pay for it.

…$36 million dollars and still not enough for whetever their grand vision is/was…wowza…