Bubble alert. Pantone 805 (bright orange, for the unitiated) is on the cover of Wired this month. The last time this color frequented the magazine was back in 2000-2002 — the time when the Web 1.0 economy hit a little speed bump that some of you might remember.

Is it mere coincendence, then, that the bright orange is here again with cover text that says, “Free! Why $0.00 is the Future of Business” just as the Web 2.0 economy seems to be peaking? I mean, MySpace started things with is US$580mm acquisition. YouTube follow-up with a $1.6b exit. Microsoft thinks Facebook is worth about $15b and Bebo just went for $850mm a few weeks ago. Or is the return of Pantone 805 the first tremor of an impending shakeup to come?

Personally, I’m betting on the latter and here’s why. There’s a popular opinion in Web 2.0 land right now that a good site should build audience first and figure out a business model later. The Wired cover story touches on the notion but goes on to several other points that I’ll respond to in future posts.

Today, I’ll point to Jason Calcanis and a post on his blog suggesting that Twitter could be a billion dollar business in just a few simple steps. The last two paragraphs at the bottom of Jason’s post make me chuckle — especially the footnote. He writes:

Running a startup is NOT about revenue anymore–it’s about critical mass. It’s about scale. When you’re playing in the big leagues with unlimited access to capital you shouldn’t worry about revenue BEFORE you have critical mass.*

* Note: if you’re not a player…and you don’t have unlimited access to capital do not take this advice and focus on building revenue streams.

I’ve done two startups now, both of which have gotten some pretty good traction and had some big successes, and I can’t recall ever having access to unlimited capital. Maybe I did something wrong.

The problem with audience in the Web 2.0 economy is that so much of it comes no strings attached. Pick a username, set a password and then click on a confirmation e-mail to activate your account. Done. But what is this audience actually worth?

Jason’s post says:

That’s what I learned at AOL: Once you have critical mass you can’t help but make a fortune. An absolute idiot with 10-20M users can make a ton of money. So, get to tens of millions of users and forget about money.

This paragraph is where he really needs the footnote. The last sentence above should say, “get tens of millions of users willing to give you their credit card numbers and pay you a monthly subscription…” The audience at AOL is worth something because they’ve already proven they’ll spend some money by virtue of their subscription fees. If you’ve got a site giving away free music or aggregating free TV, an advertiser can’t be certain they’ll ever get conversions from their ads because they don’t know if you actually spend money. Just ask eBay about the problem of extracting value from a hot brand offering service that users think of as free.

The bottom line is that no savvy advertiser will spend much on the unknown. (Hence the numerous “freebie” requests we got for “proof of concept” ad stuff at TIOTI.)

And while Jason might have a point that market leaders (e.g., Digg or Twitter) can monetize their site & features easily with a simple ad model, I pity anyone behind the leader in this case. Someone recently told me that even Gawker Media, the parent to well-known blogs like Gizmodo, is sitting on huge swaths of unsold ad inventory. They’ve even segmented their audience for targeting by having so many different specialty sites.

I guess what I’m saying is that I don’t think a big ad deal would be automatic for gregarious.com just because segment leader Twitter started monetizing in a big way.

The general theme of Web 2.0 business models is a hot topic for me, so I’ll probably revisit it several times. I’m even trying to get a special guest commenter for a piece that I’ve been dying to write.

So stay tuned…And watch out for Pantone 805 as a potential portent of Web 2.0 doom!