The dotcom boom of the late 90s was often referred to as the internet land rush – the thinking being that as with land, there was a limited amount of space and as with early market movers in traditional industries (governed largely by control of physical distribution channels) the early settlers would be able to build strongly defended market positions.
This thinking continues today, despite a long list of dotcoms that were said at some point to be “taking over the world” which are now, only a few years later, seen as relics. Wasn’t Friendster supposed to “own” the social networking market (until Facebook)? Wasn’t Geocities supposed to own the personal webpage market (until myspace)? Wasn’t Yahoo supposed to own search (until Google)? Etc.
The pattern seems to be an ever increasing rate of production new, more specialized forms of tools and communication. For example, flickr is a social network of photography, youtube is a social network of video, lookbook.nu is a social network of fashion and goodreads.com is social network of avid readers. Will some Facebook app replace these? It seems more likely to me that we will instead see these networks diverging into ever more specialized interests.
And as the rate of divergence increases, the ability to control the market for any (wide) amount of time plummets. Eventually, the model of large investments to take market share reaping large profits in the long run dies, as there will be no long run for large market shares.