About Me 0066: Making Internet Money

Exoflood an Exoyawn

Glenn Fleishman at 10:51 AM Thursday, Nov 11, 2010

Glenn Fleishman is a Seattle journalist who writes about Wi-Fi, Apple stuff, and other tech for The Economist, TidBITS, and Ars Technica. His latest book is Five-Star Apps.

The exaflood was the catchy name wrapped around a prediction that exabyte-scale demands for data would destroy the Internet, making it unusably slow and erratic. Year after year, Internet doomsayers make the same tired prognostication. Karl Bode of DSLreports.com notes that mainstream media is finally starting to get the message. The two leading prognosticators of doom, Nemertes Research and the Discovery Institute, seem to be driven by an interest in battering the concept of network neutrality and broadband regulation. I wonder why? (You may best know the Discovery Institute for its support of schools teaching sloppy magical thinking.)

Bob Metcalfe, Ethernet's inventor, famously and literally ate his words in 1997 because of a promise he made of a gigalapse in 1996 that failed to come to pass. No word yet from the current Cassandras Bhagwan Shree Rajneeshes on swallowing their pride and their continuously inaccurate doomsaying.

The Internet turns out to be resilient, not brittle, partly because money funds growth, and companies are dying to take our money. While broadband providers may try to spend the least amount to bring us passably usable service, the Internet's backbone is driven by service-level agreements, steely-eyed technologists, and filthy lucre. We may put up with "up to 15 Mbps* (*as little as 768 Kbps)" connections, but Comcast, Verizon, et al., don't play that game with their network interchanges.

The analysts who make these predictions also fail to account for dynamic feedback. Once you start engaging in behavior on the Internet that fails, you stop. When I'm watching Hulu or Netflix, and the video becomes choppy and unwatchable, I stop watching. What a concept.

Photo by yours truly.

I think one significant problem for them to solve might be a lowering of advertizing earnings. This lowered demand to rent space can occur because of greater competition by others in providing ad space (eg, the web) as well as less demand for subscriptions for the same amount and type of content as before at traditional pricing levels. [Yes, "duh", right?]

If the horse and buggy analogy fits, then the conclusion is inevitable, significant shrinkage of that market; however, there is no law stopping the businesses from changing their product or expanding into other markets. Blogs are successful (to some degree) because they embrace audience participation, for example. Have newspapers done the same? Are they leveraging the large amount of "free labor" out there? Are they giving readers a reason to stay loyal? Who said ads is the only way to succeed, just because it was a very reasonable model for many decades prior? Have the newspaper considered embracing an online ad model with a lot more sophisticated ads and appeal to entertainment? If they don't do it, someone else will and attract the eyeballs.. and the writers. There are many potential options. In fact, I have always felt that open source software would be a great marketing and engagement tool (hopefully I'll have time some day to pursue some ideas more seriously). We now have html5 as well to make entire webpages more dynamic in an integrated fashion. Buggies were great in their time but society likes to move on with more empowerment.

Anyway, they can leverage their press assets and distribution operations to provide something you can't get on the web, but they will have to think and perhaps "tweak" their business. Since paper has an appeal that is distinct form a display screen (scarcity), is published by a large trusted organization (existing brand assets), and has an existing significant and attentive audience ("first mover" and many quality eyeballs), they might hold more audience participation contests (maybe also from the web) and accept contributions from readers which then get distributed to the readership. This distribution has enough value to lead to a significant amateur section (unpaid contributors) that might prove very popular and even lead to new subscriptions. Tap contributors you pay (journalists), contributors that pay you (advertizers), and also contributors that volunteer (the readers), but put more focus on this last group. If most of this content will be new and unique, they need not worry about the contents or the "news" appearing first on the web or even for some time (not to mention the "paper" qualities stated above). And why not court web businesses more aggressively to perhaps offer the "paper" version of their offerings. In short, they have to change from being hot news information keepers to being keepers of the hard assets and distribution that a web cannot match. Build new businesses out with that focus and understanding that the information content itself might appear on the web though very possibly with a delay.

I expect all of this has already been tried with varying degrees of success. More can always be done, and some will survive and be strong while others will not.

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eric seiger do

Wednesday, December 1, 2010

Making Internet Money

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