Fred Wilson has a great post on this subject. For me he strikes the right sort of balance between the need to remain positive, the need to be realistic and the need for pragmatism when running a startup. I recommend reading the whole post, but the best summary is below, and is originally from VentureBeat:

Successful venture exits are becoming scarce. Yesterday, the National Venture Capital Association reported the first quarter saw only five venture-backed initial public offerings worth
$282.73 million, down dramatically from 31 IPOs worth $3.04 billion in
the fourth quarter. Mergers and acquisitions are also on the decline,
with just 56 in the first quarter compared to 83 in the fourth quarter.

At the same time, angel investors have become more cautious because of the economic volatility, according to the 2007 Angel Market Analysis released
Tuesday by the Center for Venture Research at the University of New
Hampshire. That’s significant because angels account for 39 percent of
investments in seed-stage start-ups.

What’s more, the Silicon Valley Venture Capitalist Confidence Index,
an index that tracks the confidence among venture investors, fell to
its lowest level in the past four years in the fourth quarter of 2007.
You can expect that this confidence fell further in the first quarter,
with the collapse of Wall Street bank Bear Stearns earlier this month.

From Techrunch:

Zillow,
the site where you can find pricing estimates and other info about
houses around the United States, aims to disrupt the online lending
market with the launch of its Mortgage Marketplace.

That is an interesting monetisation play in the online real estate space. My thinking so far, which echoes that of the numerous people I have spoken to in this space, is that the big pot of cash to go after is estate agents commissions. Mortgages feels to me that it is at least as interesting, particularly here in the UK where the position of estate agents is so entrenched.

Apple is now the number one music retailer in the US. From ars technica:

Over the past few years, we have watched Apple climb the music sales chart courtesy of the iTunes. Last month we learned that Apple passed Best Buy to become the number two retailer in the the US. Now, Apple has ascended to the top of the charts, surpassing Wal-Mart for the first time ever, according to the NPD MusicWatch Survey.

And paid digital downloads accounted for 30% of all music sold in January.

No wonder the labels are finally taking notice. I am hearing talk in lots of places that they are (finally) close to deals with some of the free ad supported music services. Let’s just hope they are being sensible about the economics.

As we ponder the economics of free it is interesting to note that the leading music retailer in the US is only in the music business to sell iPods. Unsurprisingly they are aggressively driving the price of music downwards.

I hate economic downturns. There is nothing fun about opening the TV and seeing commercials about "manage your money wisely", "managing your debt", "saving extra". In our business, this also requires caution. In the past 2 months I have seen a number of articles about the need to cut down, reduce, and save. (Check this one by Izhar Shay In Hebrew).

But not everything needs to be dark and depressing. Here are some thoughts about the positive side of a down turn:

1. Higher quality deals: In harder times, many wannabe entrepreneurs pass on their desire to start a venture. The only startups are created by the die-hard innovators, people that can't help starting their new company. This usually means higher quality deal flow with less noise.
2. Lower Prices: Valuation is never a reason for not doing a deal. Saying that, the current economy may push prices down, which is a nice bonus.
3. Less Competition: As less startups are funded, the ones that do start see more of a "blue ocean".
4. Downturn? Why now?: Actually, if we see the positive side of the down turn, we can now feel good in any scenario. Worst case, the economy will recover fast, and the good times will continue.

Be careful what you wish for. We may still have expensive deals in 2009.

• Elevator Pitch: Songkick wants to be the home of live music online