Of course the advertising world is not a zero-sum game. In fact, the overall size of the ad market has been growing like gangbusters over the last few years.

Has it grown too much? Maybe so. It's still possible to argue - easier than ever, really - that Web ads have become seriously overvalued and that the whole industry will collapse when we figure out that the intrinsic value of the average ad is x and not 10x or 20x. That seems like a sensible theoretical approach, but Google took the fun out of the last round of these arguments by experimentally disproving them to the tune of several billion dollars, so I'm not surprised to find that theory is out of fashion and that the modern entrepreneur prefers to be an experimentalist. Darwinian evolution isn't fun for everyone, but sometimes it is the fastest way to explore.

And, yes, of course there are "economic realities". The number of users and their available attention is an upper limit to the growth of ad-based sites. In a recession we will get to explore the lower limits, and the Darwinian evolution will really kick in. But that's just the business cycle. That's not a "bubble".

A bubble is a nonlinear event in which otherwise rational people - some of the smartest people you know - choose to deliberately forget everything they know about business. They're happy to pay 2x for a company that they know is only worth x because there's a sucker down the street who will pay 5x. A bubble is where you're terribly tempted to join that crowd, because they are getting rich, while you're stuck being a middle-class Cassandra with a boring, profitable job.

What I see today is a crowd of people falling over themselves to proclaim the next bubble. That looks like healthy skepticism to me. Maybe even a bit too much healthy skepticism, like a public service ad that runs ten times every hour.

However insane their valuations may appear to us, we're still at the point where investors are debating the actual value of sites like Facebook and YouTube. It's a large, young, and unpredictable market, and even in non-bubble times there are plenty of irrational investors, so it's not a very sober debate. But rationality is still in the picture. Those who believe that YouTube has a fighting chance to become the next News Corp (another worldwide media company; $24 billion annual revenue) might well argue that buying the company for $1b is a good deal. I think that's a nutty argument, because my techie instincts tell me that there are several dozen Startup News readers who could clone YouTube in less than a month, or even a week. But, you know, I could be wrong. I was wrong about Google.