Internet - A Medium or a Message? (Part IV )
By Sam Vaknin
Author of "Malignant Self Love - Narcissism Revisited"

These essays were published by the Israeli (Hebrew) edition of PC
Magazine back in 1996, when the Internet was in its formative epoch.
I have left them essentially unchanged, except for a few minor
errata I corrected. I find time travel fascinating. It is
interesting to recall the mainstream view, ten years ago, about the
Internet, its goals, its role, and its future. So, here goes:

Suppliers and Intermediaries

"Parasitic" intermediaries occupy each stage in the Internet's food
chain.

Access to the Internet is still provided by "dumb pipes" - the
Internet Service Providers (ISP).

Content is still the preserve of 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.
Even "walled gardens" of content (such as AOL) are at risk.

By way of comparison, even today, ISPs have four times as many
subscribers (worldwide) as AOL. Admittedly, this adversely affects
the quality of the Internet - 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 provide
access to their 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. Hence
its merger with Time Warner.

No wonder that many of the ISPs judge this intrusion on their turf
by the phone and cable companies to constitute unfair competition.
Yet, one should not forget that the barriers to entry are very low
in the ISP market. 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 100 billion pages. 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 Newspapers" (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
an 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- or meta- engines"). Meta-engines 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 the site") and counts
("how many") visitors to sites already exists. 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 on the Internet -
than in the Internet itself. This maxim still holds true despite the
32 billion US dollars in E-commerce in 1998. Business to Consumer
(B2C) sales grow less vigorously than Business to Business (B2B)
sales and are likely to suffer another blow with the advent of Peer
to Peer (P2P) computer networks. The latter allow PCs to act as
servers and thus enable the swapping of computer files asmong
connected users (with or without a central directory).

Content Suppliers

This is the underprivileged sector of the Internet. They all lose
money (even e-tailers which offer basic, standardized goods - books,
CDs - with the exception, until September 11, of 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
qualitative, fully commerce enabled site costs up to 5,000,000 USD,
excluding site maintenance and customer and visitor services.
Content providers 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. This
is all an off-shoot of the ethos of the Internet as a free content
area.

More than 100 million men and women constantly access the Web - but
this number stands to grow (the median prediction: 300 million).
Yet, while the Web is used by 35% of those with access to the
Internet - e-mail is used by more than 60%. E-mail is by far the
most common function ("killer app") and specialized applications
(Eudora, Internet Mail, Microsoft Exchange) - free or ad sponsored -
keep it accessible to all and user-friendly.

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

What is the meaning of "targeted audiences" or "market shares" in
this context?

If a surfer visits sites which deal with aberrant sex and nuclear
physics in the same session - what to make of it?

The public and legislative backlash against the gathering of
surfers' data by Internet ad agencies and other web sites - has led
to growing ignorance regarding the profile of Internet users, their
demography, habits, preferences and dislikes.

People like the very act of surfing. 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 on 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 porn sites (this is reminiscent of the early days of the Video
Cassette Recorder - VCR). People dedicate the same amount of time to
watching video cassettes or television as they do to surfing the
net. The Internet seems to cannibalize television.

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.

As early as 1995, the Internet had more than 100 virtual shopping
malls visited by 2.5 million shoppers (and probably double this
number in 1996).

The predictions for 1999 were 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 system and
varied ATM type banking and investment services will be provided
through it. Basically, everything can be done through the Internet:
looking for a job, for instance.

Yet, the Internet will never replace human interaction. People are
likely to prefer personal banking, window shopping and the social
experience of the shopping mall to Internet banking and e-commerce,
or m-commerce.

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 users. Browsers
already sport buttons labelled "What's New" and "What's Hot". Most
Search Engines recommend specific sites. Users are cautious. Studies
discovered that no user, no matter how heavy, has consistently re-
visited more than 200 sites, a minuscule number. The 10 most popular
web sites (Yahoo!, MSN, etc.) attracted more than 50% of all
Internet traffic. Site recommendation services often produce random -
at times, wrong - selections for their user. There are also
concerns regarding privacy issues. The backlah against
Amazon's "readers' circles" is an example.

Web Critics, who work today mainly for the printed press, will
publish their wares on the net and will link to intelligent software
which will hyperlink, recommend and refer. Some web critics will be
identified with specific applications - really, expert systems which
will incorporate their knowledge and experience.


(continued)

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AUTHOR BIO (must be included with the article)



Sam Vaknin ( http://samvak.tripod.com ) is the author of Malignant
Self Love - Narcissism Revisited and After the Rain - How the West
Lost the East. He served as a columnist for Global Politician,
Central Europe Review, PopMatters, Bellaonline, and eBookWeb, a
United Press International (UPI) Senior Business Correspondent, and
the editor of mental health and Central East Europe categories in
The Open Directory and Suite101.

Until recently, he served as the Economic Advisor to the Government
of Macedonia.

Visit Sam's Web site at http://samvak.tripod.com