since the internet exists in cyberspace it does not conform to the space-time continuum. the concept of future doesn’t apply to it. how it will affect the future of humans that interface to it is another question. personally, i am experimenting with mindwars. these message boards enable people to exchange info and paradigms in a decentralized manner like no medium b4 it. TV and newspapers serve financial interests, the internet enables intellectual exchange irrelevant to money.
Dal Timgar
Izzy, I’m not sure precisely what you’re lamenting the potential loss of. Those e-commerce businesses which no-one actually finds useful will disappear - but I’m not sure anyone will even notice them going. And they’re a very small proportion of e-biz. As Sam said, most business internet use is B2B.
The company I work for is a massive multinational insurance giant. All of its intellectual capital is on-line. Cross-office and even cross-national projects are undertaken on-line. Virtual meetings save us millions in travel costs. Business solutions are possible that were only dreamed of in the past. The internet allows us to offer our clients packages which adds a lot of value to their business. It’s a godsend. This means that our company is a big invester in internet technology.
Many companies find this. They can save on admin costs, travel costs, archiving costs and numerous other operational costs. Automatic systems can be set up to help eliminate operational risks. Any companies which benefits in this way will invest heavily in internet technology.
The biggest companies are the ones who really feel the benefits, since they are the ones with the largest operational problems. They have lots of money to throw at internet solutions.
This is what people mean when they say that the internet is all about the exchange of information, not goods. It’s what the internet was originally set up for and it’s working just fine.
To cut a long story short, nothing is going to stop investment in internet infrastructure. It’ll get bigger and bigger.
And it’s cheap! This site doesn’t really cost a lot to run, not in a business sense. And as for its benefits - I think that you underestimate the value of goodwill and synergies in business. The Chicago Reader gets nothing from this site? But thousands of people who would otherwise never have heard of them now view them very favorably (me included). Should the CR later decide to branch out, it can use its good name to stimulate growth. Multi-billion dollar sales have gone through in recent years based on little other than goodwill.
I could go on and on about other benefits, but I hope that I’ve made the point. Viva the Information Age.
regards,
pan
An example for kabbes’ point…
I work for a very large international professional services firm. Our intranet is absolutely immense, and contains almost every single tool I need to do my job - models, sample reports, checklists, work programs, analysis tools, and even online training courses, technical manuals and simulated environments for things like Win2K and SAP R/3. I select my annual benefits package online, check my payslips online, submit timesheets and expenses claims online, and share documents through Lotus Notes databases and a system called ELAN. At client sites I can demonstrate the models I use, work from pre-prepared presentation and process model templates and so on. I don’t have to go into my physical office more than once a fortnight or so (just to pick up mail).
This is where I believe a lot of the gains offered by internet/web use lie; not in B2C, or even (necessarily) B2B, but in e-business - increasing efficiency and response time compared against competitiors. Of course, it’s not necessarily going to work for everyone (you need a crystal clear strategy, management willpower and a rigid control of budgets).
The fact that they are losing money does not mean that no one finds them useful.
I have saved money and energy buying things (printer, vacuum cleaner) through the internet. You can go to price-comparison sites and get instant prices from all sorts of businesses selling what you want. It was very helpful to me. But I happen to know that at least one of the companies that I bought from (Egghead.com) is a big-time money-loser. Probably the others are as well. If they go away (and are not replaced by others), I would certainly notice the difference.
This may be true (that it’s worth it). But it may not. So it shouldn’t be assumed. And the attitude about the cost/benefit scale may change, if attitudes about the internet in general change.
I know that in my own field (employee benefits consulting) we are going headlong into internet strategy, both b2b (vendor to client) and b2c (client to employee). I have yet to get a clear sense of the actual benefits, or a confidence that anyone else has one either. Instead, there is a general sense we have to get with it or be left back. (I bring this up at meetings ocasionally, but never get a clear answer.)
(See also this in The Onion).
My company actually has the same kind of intranet that mattk refers to. I don’t use it too often, but could imagine that I might come to. But if all we’re left with are these sorts of sites, I’m sure we will miss alot of what we have now. Alas, its the Golden Age and we don’t even know it…
I hear what you’re saying Izzy. But almost by definition, those things that people find useful will find a way of hanging around, just without the clutter of the stuff that people don’t find useful.
As far as B2C goes, the internet offers us the closest approximation of perfect competition. You’ll still be able to buy vacuum cleaners on-line, provided that a company is able to offer them at a gross price that is cheaper than your local hardware store. If they can’t do this then you’re not losing anything by their demise anyway. Also (and I think that this is the key thing about e-B2C) hardware stores will still be able to put their pricelists on-line for next to no cost, enabling you to compare prices, even if you don’t actually buy on-line. Customers may well end up boycotting any company without their pricelists on-line simply because it is so much easier to compare those who have got all webbed up. (As an example, I recently cought by car insurance on-line. I only compared prices of companies on the net because I had so much choice there anyway it didn’t seem worth the effort of phoning around those who aren’t on the net.) I agree that the e-commerce will suffer a fall-out in the future, but I don’t think that this will necessarily harm the customer.
As far as internal e-business goes, mattk - your situation sounds almost identical to mine. With 17,000 employees worldwide in my subsidiary of the parent company alone, the company must save a fortune in putting all intellectual capital on-line rather than attempting to distribute it on paper. It very much has its intranet at the heart of its future business strategy.
And the CR? Well, of course I don’t know that having this site around is worth their while. But I imagine that it costs them peanuts, relatively speaking. Is there even one full-time employee for it? It’s not hard to envisage that it encourages a few more sales of its paper, as well as generating huge goodwill. If a more hardnose strategy were employed, maybe the site would be junked. And that would be a crying shame (to put it mildly). But speaking as someone with a fair idea of relative cost-scales, I find it unlikely. I reckon that this is one of their cheaper and more successful promotional campaigns.
regards,
pan
ps in a rush, no time to proofread. Apologies for any badly-constructed sentences, paragraphs and posts you’re forced to sit through.
Eventually some businesses will prevail over others. I have a feeling that the online stores of the future will be run by the same people with physical stores. THe home shopping network rakes in 1.2 billion a year. I think the internet has the potential to match and possibly surpass that. At the very least the internet will be able to provide companies a place to advertise. Much like television, radio, or magazines.
Marc
Here’s the point - today they can (sell for cheaper than your local hardware store), tomorrow they may not be able to. The reason is that they are currently selling at a loss (when business expenses are factored in) - they cannot continue to do this indefinitely.
One of the problems that face e-businesses today is, ironically, an excess of capital. These companies frequently have huge excesses of cash on hand, gained from selling stock to investors at high prices. This is how they can go on and on losing money - they have a huge amount to start with. The problem is that their competitors can also sell things at a loss for precisely the same reason. Therefore no one can raise their prices to the point of profitability, for fear of being undercut by, and losing market share to, the competition. As the internet is still a relatively new medium, market share is paramount (everyone wants to establish a major presence, so as to be around when the dust finally settles).
But this cannot go on indefinitely. Eventually the money will run out. At that point prices may have to be raised. (Which means sales will decline.) When that happens, consumers will be worse off than they are today. Though deservedly so. In effect, my ability to buy printers and vacuum cleaners for cheaper than the local store ultimately represents a subsidy on my purchase by some venture capitalist hoping to make money down the line. But I’ll be worse off when the subsidy ends.
I see - we had a failure to communicate there. Or at the least I failed to understand your point.
When you said “The golden age of the internet”, what you actually meant was “The time when I could buy slightly subsidised goods”. I agree - these days will eventually pass.
I disagree that this is a bad thing however. Non-optimal pricing due to such a spanner in the works as misplaced capital can damage an economy quite heavily. (Some economists reckon that the existence of tariffs and subsidies are a larger danger to civilization than nuclear weapons). You may get your vacuum cleaner a bit cheaper at the moment, but if the net result of all these shenanigans are that your real pay rise is 1% lower than it would otherwise have been, you haven’t really gained anything at all.
The real power of the internet will just be getting stronger and stronger, as already discussed. This will my “Golden Age”.
regards,
pan
Maybe some guru will give me a hand with this:
I’ve entered the link correctly, but it does not hook up correctly. The final digits should read “nnet04.html”. For some reason, extra digits are being added in, but if you delete them, the link works fine.
Serious content plays will have to continue to be supported in one (or more) of three ways:
Even if you’re a semi-serious web publisher doing something for fun, you’ll find that maintaining a web site will eventually develop an audience and will start cutting into business hours. It’s almost inevitable - It’s happened to me several times over. I start a website, it gets more serious than I thought, users start asking for more, I take time off to do updates and functionality enhancement, then I find myself in over my head. It’s a natural process. One has to take advertising, sell data or sell product at a profit in order to fund a site’s ongoing operations or to support the people that work on it. Either that, or the site never quite gets off the ground and its users abandon it.
All three of these potential revenue streams are affected by commercial messaging.
Advertising on a site won’t work unless you can consistently sell out at a high CPM (cost per thousand). Unless you want to invest in supporting your own ad sales force, more than likely you will have to split ad revenue 50/50 (or so) with an outsourced sales force (DoubleClick, 24/7, bla-bla, or whoever). It must cost less for you to acquire a new user than the value of that user over the course of a year or so. You’d be surprised at the number of companies that have trouble understanding this.
You can’t have valuable data to sell unless you have a large, dedicated user base, which usually takes advertising and distribution deals to build. Also, your privacy policy has to allow for sharing data with site partners. Your user base must allow for this without getting pissed off at you.
E-commerce doesn’t generate significant revenue unless you a) occupy a niche and offer everything and anything that this particular niche audience might want or need, or b) become a horizontal e-commerce portal that can make money through increased efficiency in the supply chain. Opting for either a) or b) will usually require you to invest heavily in advertising or distribution deals in order to drive awareness and significant revenue.
The current shakeout is the direct result of three factors:
E-tailers and content players are expected to make a profit TOO QUICKLY. It takes time to develop a loyal audience. It takes time to work out all the kinks in the supply chain. It takes time to develop marketing programs that acquire new users and retain them at a lower cost than the resultant per-user expenditures in advertising, distribution and technology.
VCs that backed e-commerce and content plays are TOO IMPATIENT and they expect profitability TOO QUICKLY. These VCs, on which many Internet companies relied too heavily, are pulling dollar commitments due to outside pressures. Funding that was considered “in the bag” is now turning to vapor for a lot of Internet companies.
Some Internet companies have folks at the helm who are clearly unfit to run a business.
The current shakeout will change the landscape of the Internet in the following ways:
Of the large content and e-commerce plays, only the best-funded and most efficient will be around in 2 years. Public companies with large cash reserves in the bank are at an advantage. Large ISPs will also be at an advantage, as they can draw on subscriber revenue (I classify ISPs under e-commerce, as they are selling access.)
The rest of the web will consist of personal sites, content or e-commerce plays on their way to getting serious (or on their way to a costly death), and private exchanges and networks supported by the cost savings they bring through their efficiency.
In short, the commercial Internet will be made up of large conglomerates, and it will be extremely difficult for startups to compete going forward. The only potential saving grace for startups is intellectual property law. Even so, startups will find it difficult to compete when the conglomerates move into their particular niche and overwhelm them with large cash war chests, superior infrastructure and packs of corporate lawyers to defend against lawsuits.
It will soon become apparent that all this talk about the Internet being the best marketing/sales channel for “the little guy” is nothing but BS. It takes capital and human resources to enable a message to break through the clutter of commercial messaging that already inhabits the Internet. By definition, the folks that can do that are the ones already guarding the gates and holding the keys.
By the end of 2nd quarter next year, everyone will start to see evidence of this stratification of the Internet. The future will begin to look a lot better for larger players that can weather downturns in the economy. Mid-tier players for the most part will be out of business or on their way to a gory death (bad) or an acquisition (good, but only for upper-level management). Lower-tier players will see futility in trying to act like one of the big boys and will see their ideas and innovations snarfed up by the likes of AOL, Microsoft and Amazon, or by large traditional companies with online presence, like KMart and Wal-Mart, the large media companies or infrastructure companies like Oracle and IBM.
Of course, everyone on the web will need consultants like me to make this obvious to them, so I plan to make my millions and retire to the Hamptons before the Internet turns into a corporatist playing field.
I think that an anology that certainly isn’t perfect, but is useful, is the beginning of flight. When airplanes were first invented, there was a lot of excitement. There were a lot of air shows, various flights made for non-utilitarian reasons (Limburgh. Airheart, etc.) Eventually, these sort of things basically died out. Nowadays, pretty much the only flight that goes on is strictly money-making flights. One could say that the 1930s were the Golden Age of flight, and in a way one would be right, but the fact is that today, flight is more common and affects people’s lives a lot more than it did then. I think a similar thing will happen with the Internet. Yes, much of what we now associate with the Internet will disappear. But 50 years from now, anyone who suggests that in the year 2000, the Internet was at the peak of its power, will be laughed at.
IzzyR:
Of course they aren’t selling anything on their website. No one sells anything on a website. HTML does not include protocol for financial transactions. To buy something, you have to actually send a check, and then wait for whatever is to be mailed to you. So in all cases, the website is at most soliciting, and then taking, orders. So why does this company have a website? Obviously they believe that it will increase their sales. So is it then basically soliciting orders? So the only thing it’s not doing that other sites is doing is taking orders. Unless the orders are very customized, I don’t see how this would be “too expensive”. I mean, just write a few lines of CGI, and let the computers take care of the rest.