Lovely! Thanks to Ian Yorston for the link.

Hmmm…. It’s not just Digg that’s been having trouble with restive users. It seems that Second Life is also having difficulties. Tech Review reports that:

The overseers of Second Life, a complex and booming virtual world hailed by many as the first step toward an immersive 3-D Internet, attempted yesterday to calm angry cyber-citizens who have petitioned for fixes to technical bugs recently plaguing the world.

The main problem, in members’ eyes: Second Life is growing so fast that it’s straining Linden Lab’s resources to the limit, including its developers’ ability to fix old bugs and roll out new software versions that don’t introduce new problems. In a town-hall meeting yesterday inside Second Life, the company appealed for patience.

“We are working to fix bugs and enable incremental improvement,” said Cory Ondrejka, chief technology officer at Linden Lab, the venture-funded San Francisco startup that launched Second Life in 2003. The town-hall meeting was hastily arranged in response to a damning open letter published by irritated Second Life residents on April 30. “At the same time, we are building the foundations for the next-gen architecture that will radically improve our ability to scale,” Ondrejka said.

Every day, some 25,000 computer owners, plus teams from dozens of major corporations, are rushing to join Second Life. But as these new members buy virtual land, set up house for their avatars, and start in-world businesses, the strain on the Second Life “grid” is increasing. Linden Lab is adding more than 120 new servers every week, according to Ondrejka, but users say that the company still isn’t keeping up. Complaints have piled up in Second Life forums and blogs from longtime users impatient over frequent slowdowns and crashes, property that goes missing, messages that aren’t delivered, search and friend-finder functions that don’t work, purchases that aren’t completed, and poor to nonexistent customer service and technical support.

The dissatisfaction culminated this week in the open letter, which demands that Linden Lab address the bugs “immediately,” before rolling out planned features such as voice chat. More than 3,000 Second Life users have signed the letter so far.

“People feel that Linden Lab is failing them because they are paying a great deal, in some cases, for a product that is failing to work acceptably, from a company that will no longer communicate with its customers,” says one signer, a United Kingdom-based IT manager known within Second Life as Inigo Chamerberlin…

Very astute thought from Dave Winer…

In the late 90s, the period of irrational exuberance, we knew the end would come, and we knew what the end would look like — a stock market crash of the dotcom sector. So, if Web 2.0 is a bubble, and if like all bubbles it bursts, how will we know when it happens?

I almost wrote a piece yesterday saying that since the Web 2.0 companies aren’t going public, they’re safe from busting in a visible, dramatic way. I almost said it will be hard to tell when the bust comes, it’ll be softer and slower, you won’t hear a crash or even a pop. But I was wrong, and today we got the first rumblings of the shock that will signal the end of the bubble.

Google stock will crash. That’s how we’ll know.

When I realized this, I should have known, because I’ve been saying for almost a year that Web 2.0 is nothing more than an aftermarket for Google. Startups slicing little bits of Google’s P/E ratio, acting as sales reps for Google ads, and getting great multiples for the revenue they generate by fostering the creation of new UGC to place ads on. When Google crashes, that’s the end of that, no more wave to ride, no more aftermarket, Bubble Burst 2.0. And the flip of this is also true — as long as Google’s stock stays up, no bubble burst.

Spot on. Google’s Price/Earnings ratio at the moment is around 60. That’s nuts.

Terrific Guardian column by Vic Keegan.

The creators of YouTube have done a great service in bringing video creation to the masses. But it was not because their technology was superior to others in the field (it wasn’t), but because they were in the right place at the right time when, unpredictably, YouTube suddenly attracted critical mass. This was a huge victory for garage start-ups over the likes of Google, Microsoft and Yahoo, which found to their cost that the mighty leverage arising from their big market shares in existing products buttered no parsnips in the new world of web creativity.

As a result YouTube, a company that has been mainstream for barely a year, attracted a price tag of $1.65bn, equivalent to almost $25m per employee (not that they will see much of it) or $123 for each of YouTube’s unique monthly users. The figure for those who actually generate the content would be far higher than $123 because only a small proportion of users actually put their own videos up.

Yet without those content creators, YouTube – and Flickr, and all the others – would be nothing. Imagine what would happen if eBay tried to value itself on the basis of all the inventory it held on behalf of its sellers. It wouldn’t because it knows the inventory doesn’t belong to it.

There’s something deeply comical about TechBubble 2.0 — which is what I’ve decided to call the current round of irrational exhuberance. Just to underscore how difficult it is to build and maintain a big, stable company in this febrile space, along come the reports of Yahoo’s difficulties — profits down 38%.

As far as user-generated content goes, the big question — as Vic Keegan says — is: where’s the value? The answer is that it’s in the stuff that people upload. But if people don’t like what you (the new corporate owner) start to do with the space then they can — and will — go elsewhere. Steve Ballmer implied in his BusinessWeek interview the other day, no rational company would have paid $1.65 billion for YouTube. For once, I agree with him.