Where is the disruptive effect of the Internet?
By Tom Foremski - August 1, 2006
My recent conversation with IBM's top strategist, Irving Wladawsky-Berger, about the disruptive effects of PC technologies reminded me of a key insight I had about the Internet, that almost made me faint(!)
Two years ago, on a sunny afternoon walking along Geary Street in San Francisco, I was thinking: where was the disruption from the Internet? The Internet is an incredibly powerful technology, surely more powerful than the PC, yet where was its disruptive effect?
PC technologies caused a lot of disruption, and forced so many tech companies out of business. But where was the same carnage caused by Internet technologies?
Surely, this was a more powerful technology than microprocessors and PCs? Yet the same tech companies were still there, HP, Intel, Cisco, etc. Yes, some had disappeared but that was more to do with mergers and acquisitions that are common in maturing sectors.
And the dotcom dotbomb startup failures were a creation of those times, so they don't count in accounting for disruption. Where were the established industry sectors, whose business models were being taken apart?
As I walked and pondered this, I had a realization that almost made faint, it literally made me feel weak at the knees. I realized that I was looking for the disruption in the tech sector, but I was looking in the wrong place.
I realized that the disruption was happening in the media sector. Year after year media companies were continuing to layoff thousands of people, advertising revenues were falling 30 percent every quarter, and things continued to get worse.
This was were business models were under attack, this was where an entire industry was being forced to change to a new economic reality, this was where we can see the Internet as a truly disruptive technology: you can see the train wreck happening in front of you but you cannot get out of the way.
The disruption is happening in the media sector because the Internet is a media technology, it enables publishing and distribution. Google, Yahoo, Ebay, Amazon, etc, are all media companies, they publish pages of content and advertising.
This realization has become important in my thinking and analysis of trends. And now, with this next stage, what I call Internet 2.0 (not web 2.0 because it is more than just web) the disruptive effect will be even larger.
It will affect more companies because we now have a two-way media technology. During Internet 1.0 we were able to publish outwards to any computer with a browser. This time, our media technologies such as blogging, etc, enable us to publish back inwards from any computer screen with a browser. We get to play on either side of the glass computer screen.
And this time around, every company is a media company to a greater or lesser degree. Because every company tells stories, it publishes to its customers, to its staff, to its new hires. We now have two-way media technologies and those that can adapt and master those technologies, and become technology-enabled media companies, will survive.
Because every company is a media company, the disruptive effects of Internet 2.0--a media technology on steroids--will be so much greater than from Internet 1.0. And we've only just begun.
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August 1, 2006 | Permalink | Comment | Category: Mediasphere | Subscribe to SVW
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Comments (3)
I was talking with a friend yesterday and found myself quoting you with regards to "every company is a media company". This fundamentally represents exactly what I have been struggling to explain to the PR crowd with way too many words and concepts.
You are spot on when it comes to the disruptive effects - this is further exacerbated by many of the old-guard's resistance to change. During Internet 1.0 we often spoke of the fact that "one day, the young will inherit the power structures and be able to do things right." This has slowly begun to happen in certain areas of the economy, but I fear that most of today's youth would rather attack and destroy the systems rather than work to fix them from the inside out.
It is probably the only way to achieve the change we need, but like you, I am afraid of the cost to the spirit of truthtelling at the heart of good journalism.
Posted: August 1, 2006 3:24 PM
Don't you think that the closure of Cody's in Berkeley and near death of Kepler's in Menlo Park was due to a disruptive effect on their business?
Posted: August 2, 2006 1:16 AM
Disruption happened in many more areas than just media. Look at telecom sector. Their business models are now turned upside down with the IP wave. Take financial services. Internet drove down brokerage commissions and may companies went kaput. Productivity soared in many walks of life. Researching a company or a topic is now just a few clicks away verus weeks and months. Take outsourcing of various services. Internet/IP communications reduced costs and distance and enable the acceleration. And many more...
Posted: August 2, 2006 2:41 PM