I have this image of a framework/protocol in my head around allowing various policies to be created, and built on top of each other. As a programmer I pretty much used object oriented programming as an inspiration. Though I guess even OOP had its inspiration from biology. Its a way for an organic system to grow and adapt robustly. I think just like computer programs, government needs that too.
Added to that, if the web has a decent self regulation mechanism, that makes the justification of regulating the web even harder.
The one problem is, the advantage "physical" governments have is they have sovereignty. If Amazon starts doing illegal things, the FBI can arrest Jeff Bezos. The internet doesn't have an equivlent means.
However I think there is away to have the essence of sovereignty, and that is through a new crypto-currency like bitcoin. Imagine if to be a part, and to receive the benefits of this online sovereign nation you had to register your receive address. If the sovereign entity had a way to embargo your ability to accept payments in the currency, it might be enough penalty to fall back inline with whatever regulations were created. I think it also provides another means to give legitamicy to a crypto-currency.
An example of something that would be cool is this. You want to create an open source space program, so you propose the idea on your local netizen forum. The idea has overwhelming support, so someone creates a new policy component, and gives permissions to suction tax funds. I can imagine something like that happening in hours. Imagine initiating a public effort going from idea to reality in hours.