Thursday, October 15, 2009

Can the Genie Be Put Back in the Bottle?

I am old enough to remember the pre-Web era. In fact, I graduated high school the same year Netscape Navigator launched, 1994. Prior to that time, a few people were part of services such as America Online, CompuServe, and other "gated" online experiences. In fact, when a friend first told me about Netscape, toward the end of my senior year, I naïvely asked, "Is it like AOL?" to which my friend replied, "No, it's a browser." She might as well have said, "It's a whamma-lamma-ding dong." Although I grasped the concept on an abstract level, I didn't really fully understand it until I started using web browsers regularly as a research tool and curiosity-satisfier in college.

Consider the dates of some of the most significant developments in technology and media since the advent of the Web. Craigslist - 1999 (Incorporated), iTunes - 2001, YouTube - 2005, Facebook - 2005. All within the last ten years, and in the case of the last two examples, the last five years!
With the exception of iTunes, the common denominator of these new technologies is that they're free to the end user. However, they're not free to operate and administer. Many have pointed out that YouTube has not yet to date produced anywhere near the revenue level that Google paid for it in 2006, $1.65 billion.

The problem is, once you've conditioned people to expect something for free, and then suddenly tell them you have to pay for it, you'll have a lot of angry consumers, and the inevitable consequence is, the majority of people will migrate to the free or lowest-cost alternative, even if the quality is not as good. The only way to get around this is if every media outlet simultaneously decided to charge for content at the same time. That's not going to happen.

The 800-pound Gorilla of a question still looms large for the owners and investors of these properties, "How do we make money off them?"

Now, some of these outlets currently are supported by display advertising, either in the form of Google AdWords, or tower or banner ads (coincidentally, by-and-large served by DoubleClick, now owed guessed it...Google.)

The problem is, the equation and proportion of content to advertising has fundamentally flip-flopped from the pre-Web days (finite content, upwardly competitive ad rates) to the current era (essentially infinite content, downwardly competitive ad rates). This has resulted in a highly disruptive scenario which has devastated many media companies.

Little did I foresee when I was earning my bachelor's degree in journalism, that the field I was about to enter would be positively decimated in the decade following by the explosion of free or low-cost online content.

What will the next 10 years of the post-Web era bring? Your guess is as good as mine. But my educated guess is that much like as an unruly and self-absorbed child eventually matures into an adult that takes on responsibilities and becomes largely self-sufficient, the next few years will be characterized by coming up with a model that keeps information largely accessible, but will likely be "gated" by device, and a fee-for-service, at least in terms of serving that information on a specific device.

I'm not talking about the entire World Wide Web, but those sources that are regarded as valuable and high-quality. That are valuable enough that their followers are willing to pay for it. Some current examples are the Wall Street Journal, and The Economist magazine. But for now, they are exceptions to the rule. Other outlets that attempted to "gate" their content have paid the price in terms of drastically reduced pageviews, and irate readers. But agreement is nearly unanimous that the current "free for all" model is not creating enough revenue to support the craft of journalism and media as we've known them for the past several centuries.

To conclude, I would like to recommend the book "The Chaos Scenario" by Bob Garfield. I am several chapters into the book, and have found the author's insights highly thought-provoking. I will follow up with a more comprehensive review of the book at a future date.

In the meantime, what are  your thoughts on the current state of media and the Web? Can free exchange of ideas be reconciled with the need to be economically viable? Please share your thoughts in the comments.


  1. Great post. I can actually remember asking the same AOL question and being mesmerized by the ease of use that Netscape provided.

  2. Landon, thanks for the comment. I'm sure there are many in retrospect that would have preferred to keep the online experience primarily gated. But those gates have long been broken, and we need to deal with the current reality. Based on some of the things I've read about some upcoming technologies, I think the next several years will be very interesting!