Chasing the ball

January 26, 2010

Since Tim Berners Lee’s invention first began to attract the world’s interest in the mid 1990s, with a rapid transformation of the public face of the Internet, everyone has been furiously pointing and clicking, and puzzling over how best to make money out of it. The Internet has always been a social phenomenon rather than a technological one. While the underlying layers of technology change imperceptibly, the applications on the surface undergo constant development, recycling and repackaging. For example, twenty years ago Twitter was called IRC and Web Forums were called Usenet. The trends of the day are followed by magpie-minded marketing, business and media folk, like a herd of school children chasing a football around the playground.

Nowadays, in the era of social media, information sharing and collaboration are the key characteristics. As Facebook achieves 350 million users, while simultaneously failing to make a profit, there is something of the old dotcom excitement in the air amongst investors. As John Naughton points out, this seems like “the triumph of hope over experience”. How frustrating it must be to have a user base larger than the population of  the U.S and yet not be able to sell them anything, because their minds have learned to filter out the window dressing of click-through advertising. Meanwhile Google, in the context of search, have bucked the trend and managed to capitalise on Howard Gossage’s classic observation: “The real fact of the matter is that nobody reads ads. People read what interests them, and sometimes it’s an ad.”

But recently some new business models for the information economy have begun to take shape. Firstly, there are new rules to be learnt by the old guard – the telecoms companies, who have up until now been doing all the heavy lifting between the content providers and their audience. The explosion of Internet video has brought with it a fundamental change in the textbook political hierarchy of the Internet. The Tier-1 cartel of telco giants are losing their edge as the likes of Youtube (Google) peer directly with the end user networks.

As the commoditisation of raw connectivity squeezes the profit margins, the challenge is to start spinning gold not from the network itself, but from the data created as a by-product of the network being used. The data on who the customers are, where they are, who they communicate with, and when they do it. Initially this idea begins to take shape as ‘value-add’ bolt-ons to existing services. Thinking bigger, the likes of  Telco2.0 suggest that telcos could act as mediators of trust between these customers.

This week Apple will unveil their new hypebeast. This will be a device where content and connectivity come as part of the package. Is this finally some good news for the newspapers? Purveyors of traditional media have of course always struggled with the idea of an Internet where the owners of the eyeballs don’t want to pay. We have come to expect free service and free delivery, explains Martin Geddes. While Google and Facebook provide us with incredible ‘free’ applications it is worth remembering that we do pay for these, just not with money. We forfeit our privacy and give them our attention instead.

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One Response to “Chasing the ball”

  1. Andy Says:

    The good thing about the iDrone generation is that it provides Apple with the most important element that retail products need to succeed – critical mass.

    http://www.livescience.com/health/060209_hit_songs.html

    As long as what Apple makes doesn’t suck, they have a hit product on their hands.


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