As you read the breathless reviews of Facebook’s Q2 2014 results, remember that the entire App economy depends on a tiny group of whales who spend hundreds of dollars a month on in-App purchases. This is terrifying. Facebook’s stock price is the second derivative of in-app purchase revenue. Things are highly geared, and incredibly risky. Which isn’t to say that you can’t keep making money on $FB; just know the risks you’re running.

It’s been a crazy month for me and mine as we try to plan a wedding across the continent. Now that summer is officially over it’s time to hunker down and relieve everyone’s curiosity. and catch up. So, to make for a post-free month here are two short posts sandwiched into one. The newspaper business is demonstrating that you can’t cut your way to growth. Newspapers and media companies spent most of the 1990’s cutting costs as a way to grow margins and revenues.

It’s incredibly difficult to create a product that both delights customers and generates revenue. As a result, the usual way to build a digital media business is to first create something that users love and then, months or years later, find a way to really monetize it. Youtube followed this model for years. It now looks like Google is serious about making money from Youtube. And just in time. As audience and time spent continues to shift from TV to the web advertisers are looking for scalable but innovative channels through which to reach consumers.

I’ve been thinking a lot about the kinds of businesses that will start and thrive in this economy. The bulk of web 2.0 companies were built (and bought) based on the thought that they would aggregate and re-sell people’s attention. As we moved through the business cycle, some companies developed exotic ways of targeting their users (Facebook), others used AdSense to generate a trickle of revenue, others based their businesses on driving search revenue (AVG, w3i, Conduit, Dynamic Toolbar, Freecause) and still others just left the problem for their future owners to solve.