Like Electricity, the Web is a Liberator That’s Here to Stay

The irrational exuberance triggered by the stock market’s discovery of the internet provided an excellent illustration of my First Law of Technology -we always overestimate the short-term impact of new technologies while underestimating their long-term impacts. In the long run the internet will probably have as transforming an effect as the automobile, so it’s understandable investors wanted to get in on the ground floor. But they got the timescales wrong.

While most of the “pure-play” dotcoms have evaporated, in the real world the internet continues to penetrate every sphere of our lives. About 45% of all British households are now connected to the Net (up from 30% a year ago). There are more than 500 million internet users worldwide. The Pew Internet surveys show that more than 50 million Americans send at least one email message a day. As they gain confidence, they use the Web more at work, write emails with more significant content, perform more online transactions and pursue more serious activities online.

The same holds for industrial use of the Net. All the signs are that large companies are increasingly requiring that everyone in their supply chains communicates with them via the Net. They are also moving towards online auctions for procurement. This trend is inexorable because the economics are inexorable. It costs companies anywhere from $5 to $80 to process a paper-based transaction whereas doing the same thing online can cost less
than a dollar.

Ever since the Nasdaq crash people have been asking plaintively, “How is it possible to make money from the internet?” It’s the wrong question, because it’s based on a fundamental misconception. Companies think the internet is a new way of doing business – like mail order on steroids. In fact the Net is much more like electricity. Nobody except power utilities makes money from electricity, but all businesses make money by using it.

Some industrial and commercial misconceptions about the Net are crippling. Huge swaths of the entertainment industry persist in thinking that the Web is just billion-channel television. It’s nothing of the kind. Television is a “push” medium that enables content-providers to push content at passive consumers. The Web, in contrast, is a “pull” medium – nothing comes unless you click on it and request it. It’s email, instant messaging and file sharing that dominate people’s interactions with the network, all non-passive activities.

The first step on the road to business success on the Net is to drop the wishful thinking about what industries would like it to be and come to terms with what it is – an astonishing system that enables people to communicate on an unparalleled scale and with unprecedented intensity. The Net is a huge global conversation, and business will have to decide whether it wants to join that conversation or be excluded from it.

The Net’s permissive openness is anathema to governments and the entertainment industries, both of whom are conspiring to destroy it by making it closed and controlled. There won’t be another tech boom if they are allowed to succeed.

The Guardian Weekly, 4-4-2002, page 14