02:00 PM

The Internet train wreck part 2: This is where you can see it...

by Tom Foremski for SiliconValleyWatcher

In the earlier post I asked:

“There is no doubting that the Internet is a powerful technology, and therefore it must be a disruptive technology. But where is the disruption in the tech sector? Intel, HP, IBM, Cisco, and all the other well-established tech companies are still here, after the Internet revolution.”

I realized that I was looking for the train wreck in the wrong place. I was looking in the tech sector, but I realized that the Internet was not about a new technology, its technologies based on microprocessor, software, and network technologies were not that new. Yes, the chips used for Internet systems and so on, were more powerful and cheaper than before, but that was because of improvements to technologies that had already been invented--silicon chip technologies that led to microprocessor, memory chip, operating systems, and related technologies. There were no "new" technologies that enabled the Internet.

The Internet became the first "open source" project

What was new about the Internet was that we had a single collection of standards for communicating e-mail and other data between computers, on a highly reliable network. Plus, we had the web browser--a way to read web pages on any PC computer screen.

All these Internet technologies were held in a type of creative commons, no company owned them, they were developed with US government funds and offered openly. And they continue to be developed openly. It's a great example of the Internet as the first open source project. And it’s a government initiated open-source project (is the US government communist, Bill? ;-)

Internet as disruptive media technology

So, with a common foundation of communications technologies, the internet plus the web browser became a fantastic publishing/media platform.

And it is a disruptive technology, but it is a disruptive media technology. The web browser allows for cheap and easy publication of pages of content, and their distribution.

Here is the train wreck

The train wreck is occurring in the printed media sector (and soon—in the older “new” media sector--the online news magazines formed 5 to 10 years ago.)

Layoffs continue to be announced almost every quarter by newspaper groups. My profession has probably suffered the worst of any sector since the dotcom dotbust.

Technology and technology-jobs related advertising--a vital mainstay of newspaper and print magazine revenues for more than 20 years, continues to decline. For example, Dow Jones latest numbers showed a continued decline in tech advertising of more than 27 percent in the most recent quarter, from a year ago--down 24 percent for the full year.

Tech print advertising isn’t coming back and the continued consolidation in the tech industry, such as Symantec and Veritas, continues to take out huge chunks of advertising.

Top Internet companies are media companies

Internet 1.0 and the web, created large technology enabled media companies. Look:

Yahoo—publisher of news and a myriad of other pages of content including ads for selling items in auctions, finding a date, and other newspaper-like services.

Google—publishes pages of content that consist of machine-harvested links and sells advertising on those pages.

Ebay—publishes pages of content by becoming a platform for others to create online catalogs and trade products through a newspaper classifieds-type of marketplace.

Amazon—publishes pages of reader-generated reviews and descriptions of books/products plus it sells almost any product from many other retailers, through its online shopping platform.

AOL-Time Warner—publisher.

Media Tech disruption will accelerate

Internet 1.0 produced media technologies that continue to disrupt print media, and that disruption will accelerate in Internet 2.0 because of the new media technologies such as blogging, wikis, and related technologies/tools/applications.

Internet 2.0 media technologies provide a two-way web, a readable and write-able web, as some call it. (Or if I were Dr Dolittle, a PushMe-PullMe type of web.)

The web browser is still important. But this time around, we get to write on the other side of the glass screen.

Building communities and a better mousetrap

The new media technologies pull together a community of readers as the content seemingly magically finds its readership. Build a better mousetrap, and truly the world does beat a path to your doorstep.

If you produce content of value, readers will find it, share it, and discuss it. If you don’t, they won’t. It’s the democratization of content.

For example, the Google atom bomb entry we published a couple of weeks ago. It was interesting to see it spread. From just about 50 mentions on other blogs/websites on Friday, it grew to 1200 then to 44k then more than 120K over the weekend. We had an astounding number of visitors on a Sunday!

Internet Squared

This combination of two-way publishing technologies results in a new type of communications architecture. Maybe it should be called Internet to the power of 2. It marries an underlying very powerful, incredibly cheap hardware and software communications technology, with a two-way media publishing technology that facilitates the movement and development of ideas on an unprecedented scale--outwards from the publisher and back towards the publisher.

To the extent print newspapers and magazines see the train coming, they can’t move out of the way of the train. That’s because we are still developing the mechanisms to recover the value of publishing human created content online.

The online ad networks and sponsored text ad links are not yet good enough and suffer from several serious issues, such as click fraud and other flaws. And so much of the establishment print media cannot jump to the online model because there is no support for its costly cost base--at least not yet. And it might be too late when it comes.

Also, in Internet 2.0, the effects of the media technologies will have a disruptive effect on almost every type of company.

I’ll tell you why later...but you can probably figure it out.