The consensus of public opinion seems to be that the internet will grow and it’s impact on our lives will only increase. While this may indeed turn out to be true, I believe that the possibility also exists for the internet to shrivel up and contract significantly. We may turn out to be experiencing the Golden Age of the Internet, and not realizing it.
The reason for thinking this is that age old problem - someone has to pay the bills. As it stands now, relatively few internet related businesses are money-making concerns. Most are living off their venture capital reserves, as investors poured money into their IPOs with the expectation that down the road, when the internet is the way of life, the companies that start up now will be making money hand over fist. But in many cases these expectations have already begun to sour. As an example, Priceline.com saw its stock price drop from a high of about $104 last March to about $6 a share now. Many of the most celebrated internet businesses (e.g. Amazon, Egghead and the like) have never made a profit and may not any time soon.
So what happens if it turns out that the internet, great as it is, is not tremendously suited to making money? Or, more significantly, even it can make money, if it cannot make money to the extent that the venture capitalists thought it could? I would think it’s only a matter of time before many of the e-businesses begin closing up shop. This will have a ripple effect. Many websites derive their main source of revenue from advertising. The advertising is typically for some e-business or other. If there is a significantly reduced number of e-businesses willing to pay for advertising, this source of revenue will dry up.
Furthermore, there are many establishments that have rushed to get on the internet bandwagon without a clear plan to make money out of it. These entities feel that they must “go digital” in order to survive in the 21st century. (My understanding is that the Chicago Reader maintains this website for similar reasons). If, when the dust settles, it becomes apparent that digital is not the wave of the future (business-wise that is) these establishments may reduce their presence as well.
One counterpoint is that I once saw in some article (NY Times or WSJ) that one reason that e-businesses have such a difficult time making a profit is because the ease of price shopping on the net means that the established concerns can never raise prices because of the risk of being immediately undercut by new startups. This problem may be eased if the venture capital dries up for new businesses. But in any event, this scenario too presupposes that the net will shrink.
I guess my point boils down to this: The net cannot survive at all under the present (internet) economic conditions. Something has to give. Until we know what this something is, it is a mistake to predict the future based solely on advances in technology.