With the first half of 2008 solidly behind us, I thought it’d be worthwhile to look back at some of the general trends established in the internet economy. After all, it’s hard to know where you’re going if you don’t know where you’ve been.

What follows are the most important trends I saw in the first half of the year.

The Technology Industry Learns It’s Not a Walled Garden

Some believed that the technology industry is a walled garden, whose most successful companies are largely immune from the ills of the global economy. Some went so far as to call technology powerhouses like Google “recession-proof.

Yet despite the fact that Google’s business has held up pretty darn well, Google’s shares, which sold for $691.48 on December 31, 2008, traded at $473.75 on July 31, making it hard to argue that the company has the type of business that can keep it a strong bull in a bear market.

The reality is that the technology industry – and all of the companies in it – are impacted by what’s taking place in the global economy.

While many technology companies have held up quite well despite the downturn, especially those with a presence in emerging markets, the first half of 2008 has proven that macroeconomic forces cannot be ignored.

Online Retail a Bright Spot for Bricks and Mortar Retailers

It may not be “sexy,” but online retail has proven its maturity in the tough economic conditions of the first half of 2008. In fact, online retail has proven to be one of the few bright spots for some brick and mortar retailers who are grappling with slowed consumer spending.

For retailers like Kohl’s and Williams-Sonoma, the internet is playing a major role in offsetting lower in-store sales caused by the economic downturn.

VCs Hurt, Double Down on “Top” Consumer Internet Startups

2008 has not been friendly to VCs. Not a single VC-backed startup went public in the second quarter, which also saw the “slowest pace of merger deals involving venture-backed companies in at least a decade.”

Investor/blogger Paul Kedrosky stated:

“There is nothing that the industry is producing that investors want. The stuff they’re investing in is idiosyncratic–it’s fun and appealing to them, but Wall Street doesn’t care.

“The Valley is operating in its own little world, and the capital markets don’t care about the things that are getting the Valley excited.”

While there are lots of factors in the drought VCs are experiencing, I think Kedrosky is spot on. And the actions of some VCs seem to confirm this.

Many VCs have turned their attention to bigger opportunities. Cleantech in particular has lured many VCs challenged to put their capital to work chasing greater rewards.

Prominent firms such as Kleiner Perkins, an early investor in Google, has completely avoided Web 2.0 and according to some, is less-than-enthusiastic about internet startups altogether.

Some investors in the consumer internet space seem to be “doubling down” on the few startups that they believe will emerge victorious.

While second and third-tier firms are still placing bets anywhere and everywhere, the sizable rounds raised by hyped startups such as Slide, RockYou, Meebo, Ning and Twitter in the first half of the year represent, in my opinion, bets on the consumer internet startups top-tier investors believe are “most likely to succeed.

Web 2.0 Starts to Look a Lot Like Web 1.0

For all the hype, the realization that Web 2.0 is failing to live up to expectations has become more and more evident to more and more observers.

Web 2.0 failures became a more frequent occurrence in the first half of 2008 and as noted above, some VCs are moving on.

While the lack of an IPO market for Web 2.0 startups means that the fallout from Web 2.0’s bust will be less visible and the pain confined to a smaller group of stakeholders, Web 2.0 increasingly looks a lot like Web 1.0 in the sense that unbridled enthusiasm has given way to pragmatism and in some cases, downright pessimism.

Even Tim O’Reilly opted to turn The Web 2.0 Summit into a non-Web 2.0 event, about as good a red flag as any that Web 2.0 has finally come in contact with reality.

Content: The King is Dead, Long Live the King!

With the rise of Web 2.0 and the age of user-generated content, some predicted that the professionally-created content usually produced by big media would be marginalized as consumer producers increasingly created and distributed compelling content of their own.

Yet professional content has reasserted itself and this was evident in the first half of 2008. Two examples:

  • NBC Universal and News Corp.’s online video joint venture, Hulu, which launched in March has done far better than skeptics predicted it would.

    Hulu, which offers streaming versions of over 400 popular television shows and 100 movies, has experienced few problems in finding advertisers and sponsors and is expected to generate $45 to $90m in revenues this year.

  • Google’s YouTube, which is battling a $1bn copyright infringement lawsuit, on the other hand, is expected to generate $200m in revenues this year but has exponentially greater traffic than Hulu and has significantly greater monetization challenges.

    Leaving little doubt as to its recognition that professional content is perhaps the key to YouTube’s financial success, Google is shifting much of its focus to professional content by experimenting with long-form video and new monetization strategies.

Clearly, while user-generated content will have its place, 2008 is proving that the death of professional content was greatly exaggerated.

Heads in the Cloud

Is “the cloud” the “next big thing“? Allen Stern of CenterNetworks observes (and jokes) that cloud computing has become “this year’s hot topic.”

Of course, as he also observes, cloud computing is just the latest buzzword that describes what ASPs (“application service providers“) and SaaS (“software as a service“) providers have been offering for years.

But that doesn’t mean that cloud computing isn’t worth noting.

From large players like Google and Amazon to upstarts like RightScale and Parascale, lots of heads were in the cloud in the first half of 2008.

Putting aside the fact that, in my opinion, today’s “cloud computing” is little more than the evolution of mainframe computing (as an E-consultancy.com reader recently pointed out), there was no shortage of significant outages in the first part of the year, begging the question – as businesses, will cloud companies be capable of making it rain?