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Internet: A Medium Or A Message? Essay, Research Paper

Sam Vaknin’s Psychology, Philosophy, Economics and Foreign Affairs Web SitesThe State of the Net: An Interim Report about the Future of the InternetWho are the participants who constitute the Internet?

Users – connected to the net and interacting with it

The communications lines and the communications equipment

The intermediaries (e.g. the suppliers of on-line information or access providers).

Hardware manufacturers

Software authors and manufacturers (browsers, site development tools, specific applications, smart agents, search engines and others).

The “Hitchhikers” (search engines, smart agents, Artificial Intelligence – AI – tools and more)

Content producers and providers

Suppliers of financial wherewithal (currently – corporate and institutional cash to be replaced, in the future, by advertising money)

The fate of each of these components – separately and in solidarity – will determine the fate of the Internet.

The Internet has hitherto been considered the territory of computer wizards. Thus, any attempt at predicting its future applied the Olympic formula : “Faster, Higher, Stronger” to its hardware and software determinants.

Media experts, sociologists, psychologists, advertising and marketing executives were left out of the collective effort to determine the future face of the Internet.

The Internet cannot be currently defined as a medium. It does not function as one – rather it is a very disordered library, mostly incorporating the writings of non-distinguished megalomaniacs. It is the ultimate Narcissistic experience.

Yet, ever since the invention of television there hasn’t been anything as begging to become a medium as the Internet is.

Three analogies spring to mind when contemplating the Internet in its current state:

A chaotic library

A neural network or the equivalent of a telephony network in the making

A new continent

These metaphors prove to be very useful (even business-wise). They permit us to define the commercial opportunities embedded in the Internet.

Yet, they fail to assist us in predicting its future which lies in its transformation into a medium.

How does an invention become a medium? What happens to it when it does become one? What is the thin line separating the basic function of the invention from its flowering in the form of a new medium? In other words: when can we tell that some technological advance gave birth to a new medium?

This work also deals with the image of the Internet once transformed into a medium.

The Internet has the most unusual attributes in the history of the media.

It has no central structure or organization. It is hardware and software independent. It (almost) cannot be subjected to legislation or to regulation. Take on example: downloading music from the internet – is it an act of recording music? This has been the crux of the legal battle between Diamond Multimedia (the manufacturers of the Rio MP3 device) and the recording industry in America.

Its data transfer channels are not linear – they are random. Most of its “broadcast” cannot be “received” at all. It allows for the narrowest of narrowcasting through the use of e-mail mailing lists, discussion groups, message boards and chats. And this is but a small portion of an impressive list of oddities. This idiosyncrasy will shape the nature of the Internet as a medium. Growing out of bizarre roots – it is bound to yield strange fruit as a medium.

So what are the business opportunities out there?

I believe that they are to be found in two broad categories :

The shaping of the Internet as a medium, using the right software and hardware

The shaping of the Internet as a medium through contents

The Map of Terra InterneticaThe Users How many users are there ? How many of them have access to the Web (World Wide Web – WWW) and use it ? There are no unequivocal statistics. Those who presume to give the answers (including the ISOC – the Internet SOCiety) – rely on very partial and biased resources. Others just bluff for very unscientific reasons.

Yet, all agree that there are, at least, 70 million active participants in North America (the Nielsen and Commerce-Net reports).

The future is, inevitably, even more vague than the present. Authoritative consultancy firms predict 66 million active users in 10 years time. IBM envisages 700 million users. MCI is more modest with 300 million. At the end of 1999 there were 130 million users.

This is not serious futurology. It is better to ignore these predictions and to face facts.

The Internet – an Elitist and Chauvinistic Medium The average user of the Internet is young (30), with academic background and high income. The percentage of the educated and the well-to-do among the users of the Web is three times as high as their proportion in the population. This is fast changing only because their children are joining them (6 million already had access to the Internet at the end of 1996 – to be joined by another 24 million by the end of the decade). This may change only due to presidential initiatives (from Al Gore in the USA to Mahatir Mohammed in Malaysia), corporate largesse (Microsoft, for one) and institutional involvement (Open Society in Eastern Europe). These efforts will spread the benefits of this all-powerful tool among the less privileged. A bit more than 50% of all users are men and they are responsible for 60% of the activity in the net (as measured by data volume).

Women seem to limit themselves to electronic mail (e-mail) and to electronic shopping of goods and services. Men prefer information because knowledge is power.

Most of the users are of the “experiencer” variety. They are leaders of social change and innovative. This breed populates universities, fashionable neighbourhoods and trendy vocations. This is why many wonder if the Internet is not just another such fad, albeit an incredibly resilient one.

Though most users have home access to the Internet – they still prefer to access it from work, at the employer’s expense, though this preference is slight and being eroded. Most users are, therefore, exploitative in nature. Still, we must not forget that there are 37 million households of self employed and this possibly distorts the statistical picture somewhat.

The Internet – a North American Phenomenon Not European, not African, not Asian (with the exception of Israel and Japan), not Russian , nor a Third World phenomenon. It belongs squarely to the wealthy, sated world. It is the indulgence of those who have all else and their biggest worry is their choice of entertainment for the night. Between 60-70% of all Internet users live in the USA, 5% in Canada. They are rare in Europe (except in Germany and in Scandinavia). The Internet lost to the French Minitel because the latter provides more locally relevant content.

Communications Most computer owners possess a 28,800 bps modem. This is much like driving a bicycle in a German Autobahn. The 56,600 bps is gradually replacing its slower predecessor (28% of computers with modem) – but even it is hardly sufficient. To begin to enjoy video and audio (especially the former) – data transfer rates need to be 50 times larger.

Half the households in the USA have at least 2 telephones and one of them is usually dedicated to data processing (faxes or fax-modems).

The ISDN could constitute the mid-term solution. This data transfer network is fairly speedy and covers 70% of the territory of the USA. It is growing by 100% annually and its sales topped 10 billion USD in 1995/6.

Unfortunately, it is quite clear that ISDN is not THE answer. It is too slow, to user-unfriendly, has a bad interface with other network types. There is no point in investing in temporary solutions when the right solution is staring the Internet in the face, though it is not implemented due to political circumstances.

A cable modem is 80 times speedier than the ISDN and 700 times faster than a 14,400 bps modem. However, is does have problems in accommodating two-way data transfer. There is also need to connect the fibre optic infrastructure which typifies cables to the old copper coaxial infrastructure which characterizes telephony. Cable users engage specially customized LANs (Ethernet) and the hardware is expensive (though equipment prices are forecast to collapse as demand increases). Cable companies simply did not invest in developing the technology : the law (prior to the 1996 Communications Act) forbade them to do anything that was not one way transfer of video by cables. Now, with the more liberal regulative environment, it is a mere question of time until the technology is found.

Actually, most consumers single out bad customer relations as their biggest problem with the cable companies – rather than technology.

Experiments conducted with cable modems led to a doubling of usage time (from an average of 24 to 47 hours per month per user) which was wholly attributable to the increased speed. This comes close to a revolution in the culture and in the allocation of leisure time. Numerically speaking : 7 million households in the USA will be fitted with a two-way data transfer cable modem. This is a small number and it is anyone’s guess if it constitutes a critical mass. Sales of such modem amount to 1.3 billion USD annually.

50% of all cable subscribers also have a PC at home. To me it seems that the merging of the two technologies is inevitable.

Other technological solutions – such as the ADSL – are being developed and implemented.

Hardware and Software Most of the Internet users (62%) work with a Windows operating system. About 21% own a Mackintosh (much stronger graphically and more user-friendly). Only 7% continue to work on UNIX based systems (which, historically, fathered the Internet) – and this number is fast declining. A strong entrant is the free source LINUX operating system.

Virtually all the users employ a browsing software : most of them (56%) use Netscape’s products (Navigator and Communicator) and the minority shares the antiquated Mosaic (the SPRY version, for instance) and Microsoft’s Explorer (close to 40% of the market). The sales of browsers are expected to hit 4 billion USD in the year 2000 (Hembrecht and Quist).

Browsers are in for a great transformation. Most of them will have 3-D, advanced audio, telephony / voice mail (v-mail), e-mail and conferencing capabilities integrated into the same session (and this includes video conferencing in the further future). They will become self-customizing, intelligent, Internet interfaces : they will memorize the history of usage and user preferences and adapt themselves accordingly. They will allow content-specificity : unidentifiable smart agents will scour the Internet, make recommendations, compare prices, order goods and services and customize contents in line with self-adjusting user profiles.

Two important technological developments must be considered:

Palmtops – the ultimate personal (and office) communicators, easy to carry and providing Internet access anywhere, independent of suppliers and providers and of physical infrastructure (in an aeroplane, in the field, in a cinema).

The second : wireless data transfer and wireless e-mail, whether through pagers, cellular phones, or through more sophisticated apparatus and ybrids such as smart phones. Geotech?s products are an excellent example : e-mail, faxes, telephone calls and a connection to the Internet and to other, public and corporate, or proprietary, databases – all provided by the same gadget. This is the embodiment of the electronic, physically detached, office.

We have no way of gauging – or intelligently guessing – the part of the mobile Internet in the total future Internet market but it is likely to outweigh the “fixed” part. Wireless internet meshes well with the trend of pervasive computing and the intelligent household. Household gadgets such as microwave ovens, refrigerators and so on will connect to the internet via a wireless interface to cull data, download information, order goods and services and perform basic maintenance functions upon themselves.

Suppliers and Intermediaries “Parasitic” intermediaries occupy each stage in the Internet chain of food.

Access to the Internet? Internet Service Providers (ISP)

Content? – content suppliers and so on.

Some of these intermediaries are doomed to gradually fade or to suffer a substantial diminishing of their share of the market. What justification was there for the existence of the likes of CompuServe and America On line (AOL) had they not matched up with portals and content providers?

Before the 1998/9 spat of mergers and acquisitions, in 1996 it was predicted that they will have only 16 million subscribers in the USA by 1997 – and this was before the technical and corporate upheavals in AOL.

By way of comparison, even today, ISPs have twice as many subscribers (worldwide). Admittedly, this adversely affects the quality of the service – the infrastructure maintained by the phone companies is slow and often succumbs to bottlenecks. The unequivocal intention of the telephony giants to become major players in the Internet market should also be taken into account. The phone companies will, thus, play a dual role : they will supply the infrastructure to their competitors (sometimes, within a real or actual monopoly) – and they will compete with their clients. The same can be said about the cable companies. Controlling the last mile to the user’s abode is the next big business of the internet. Companies such as AOL are disadvantaged by these trends. It is imperative for AOL to obtain equal access to the cable company’s backbone and infrastructure if it wants to survive.

No wonder that many of the ISPs judge this to be an unfair fight. On the other hand, it takes a minimal investment to become an ISP. 200 modems (which cost 200 USD each) are enough to satisfy the needs of 2000 average users who generate an income of 500,000 USD per annum to the ISP. Routers are equally as cheap nowadays. This is a nice return on the ISP?s capital, undoubtedly.

The Hitchhikers The Web houses the equivalent of 10 million books. Search Engine applications are used to locate specific information in this impressive, constantly proliferating library. They will be replaced, in the near future, by “Knowledge Structures” – gigantic encyclopaedias, whose text will contain references (hyperlinks) to other, relevant, sites. The far future will witness the emergence of the “Intelligent Archives” and the “Personal Papers” (read further for detailed explanations). Some software applications will summarize content, others will index and automatically reference and hyperlink texts (virtual bibliographies). An average user will have on-going interest in 500 sites. Special software will be needed to manage address books (”bookmarks”, “favourites”) and contents (”Intelligent Addressbooks”). The phenomenon of search engines dedicated to search a number of search engines simultaneously will grow (”Hyper-engines”). Hyperengines will work in the background and download hyperlinks and advertising (the latter is essential to secure the financial interest of site developers and owners). Statistical software which tracks (”how long was what done”), monitors (”what did they do while in”) and counts (”how many”) visitors to sites exist. Some of these applications have back-office facilities (accounting, follow-up, collections, even tele-marketing). They all provide time trails and some allow for auditing.

This is but a small fragment of the rapidly developing net-scape : people and enterprises who make a living off the Internet craze rather than off the Internet itself. Everyone knows that there is more money in lecturing about how to make money in the Internet – than in the Internet itself. This maxim still holds true despite the 32 billion US dollars in E-commerce in 1998.

Content Suppliers This is the underprivileged sector of the Internet. They all lose money (except sites offering basic, standardized goods – books, CDs – and sites connected to tourism). No one thanks them for content produced with the investment of a lot of effort and a lot of money. A really good, fully commerce enabled site costs up to 5,000,000 USD, excluding current updating – “site maintenance” – and customer and visitor services. They are constantly criticized for lack of creativity or for too much creativity. More and more is asked of them. They are exploited by intermediaries, hitchhikers and other parasites.

Most of them produce Web content. 32 million men and women constantly access the Web – but this number stands to grow (the median prediction: 120 million). Yet, while the Web is used by 35% of those with access to the Internet – e-mail is used by more than 50%. E-mail is by far the most common function and specialized applications (Eudora, Internet Mail, Microsoft Exchange) have upgraded it to a state of art.

Most of the users like to surf (browse, visit sites) the net without reason or goal in mind. This makes it difficult to use traditional marketing parlance:

what is the meaning of targeted audiences market shares in this context?

If a surfer visits sites dealing with aberrant sex and nuclear physics during the same session – what to make of it?

People like the very act of surfing, then they want to be entertained, then they use the Internet as a working tool, mostly in the service of their employer, who, usually foots the bill. Users love free downloads (mainly software).

“Free” is a key word in the Internet : it used to belong to the US Government and to a bunch of universities. Users like information, with emphasis on news and data about new products. But they do not like to shop on the net – yet. Only 38% of all surfers made a purchase during 1998.

67% of them adore virtual sex. 50% of the sites most often visited are porno sites (this is reminiscent of the early days of the Video Cassette Recorder – VCR). A- propos video : people dedicate the same amount of time to watching video cassettes as they do to surfing the net.

Sex is followed by music, sports, health, television, computers, cinema, politics, pets and cooking sites. People are drawn to interactive games. The Internet will shortly enable people to gamble, if not hampered by legislation. 10 billion USD in gambling money are predicted to pass through the net. This makes sense: nothing like a computer to provide immediate (monetary and psychological) rewards.

Commerce on the net is another favourite. The Internet is a perfect medium for the sale of software and other digital products (e-books). The problem of data security is on its way to being solved with the SET (or other) world standard.

The Internet has more than 100 virtual shopping malls and they were visited by 2.5 million shoppers in 1995 (probably by double this number in 1996).

The predictions for 1999 : between 1-5 billion USD of net shopping (plus 2 billion USD through on-line information providers, such as CompuServe and AOL) – proved woefully inaccurate. The actual number in 1998 was 7 times the prediction for 1999.

It is also widely believed that circa 20% of the family budget will pass through the Internet as e-money and this amounts to 150 billion USD.

The Internet will become a giant inter-bank clearing and varied banking and investment services will be provided through it. Basically, everything can be done through the Internet : looking for a job, for instance.

Some sites already sport classified ads. This is not a bad way to defray expenses, though most classified ads are free (it is the advertising they attract that matters).

Another developing trend is website-rating and critique. It will be treated the way today?s printed editions are. It will have a limited influence on the consumption decisions of some of them. Browsers already display a button labelled “What?s New” and another one called “What’s Hot”. Most Search Engines recommend specific sites. Users are cautious. Studies discovered that no user, no matter how heavy, has visited more than 200 site, a minuscule number. Also, a random – at times, the wrong – selection for the user.

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