The Internet is for data

On Friday, I promised to explain my thinking about the Internet, paywalls, and journalism. And I’ve decided to do it through a series of posts building on each other. This is the first in that series. And I hoping to lay out a broad case of what the Internet is good for as a way of making the case for why news and media has developed as it has. When this series of posts is over, the conclusion I think I will come to is that paywalls are the future of journalism.

Here goes

The virtual world

I want to start out with the obvious. The Internet isn’t ‘real’. It is virtual. And by that I mean that the Internet is basically an extension of other forms of non-direct communication that have become ever more sophisticated over time.

You’ve got five senses: taste, touch, smell, hearing and sight. And I have put them in order of proximity – with taste being the sense that requires something to be closest to us and sight the sense that we can use when objects are furthest away.

Now, even if we can’t touch, taste or smell someone or something, if they are within our line of sight or within shouting distance, we can use our eyes and ears to communicate with them. But once they go outside of that sphere, we have to either accept that there will be no further communication with them or devise a way to overcome those obstacles.

For the sake of argument, let’s call these devices “the virtual world”. Think of carrier pigeons of years gone by. These birds were bred to find their way home over very long distances, even when they required travelling miles out of the line of sight. So when a carrier pigeon delivers a message, it’s acting as the messenger in the virtual world. You certainly can’t taste, touch or smell the other person. You can’t even hear their voice. But you also never saw them write their message.

So you’re relying on the ‘data’ they are sending to you – and having not seen them pen that message — also on the reliability of the form of communication to know who is actually sending the message.

That’s the virtual world — devoid of the ability to respond using the five senses except via the data we receive. And, thus, the virtual world is also highly dependent on trust and a suspension of disbelief to be an effective medium, since everything in it is ‘second hand’ and subject to exploitation and chicanery.

The internet is for data

As technology evolved, we went from messages carried by pigeons on written words to complex mail systems to telegraph messages to telephones and video conferences. The world was still virtual. But the data became ever richer.

The Internet is at the long tail end of that technological evolution, now carrying a panoply of ways for people and companies to interact with other people and other companies.

The first two DVDs I bought back in the late 1990s living in London were “Enemy of the State” with Will Smith and “The Net” with Sandra Bullock. Both films are technology-laden thrillers. But “The Net” was the one that best channeled the future, with Bullock an Internet junkie who lived more online than in the real world. As Kim Maxwell wrote 20 years ago in a book I read back then, the content delivery networks of the future will be able to deliver any content we want anywhere we want by 2029.

But, even so, it’s still a virtual world. The Internet is still for data.

Yahoo gets it wrong

When I left London as the Internet bubble reached its peak, naturally I joined a couple of Internet companies!! I eventually ended up at Yahoo!. (They spelled their name with an exclamation point back then.)

Now, at Yahoo under Terry Semel, a former media guy, it was all about media. It wasn’t about data. The idea was to ‘curate’ data and create a rich media environment that was second to none. And Yahoo would do this by packaging the data for the greatest usability, curating the data better than the competition, and striking the right partnerships to fill in the gaps that Yahoo couldn’t fill on its own.

But Yahoo’s idea of the Internet was fundamentally wrong.

I worked in the HotJobs division. And the goal of our organization was the exact same: take what used to be an offline job advertising model and put it online, packaging it in a way and using partnerships to increase the visibility of each advert.

Curation is great. And a slick user interface makes a website easy to use. But why would you go to a site like Yahoo or HotJobs that has some of the data, when you can go to another website that has all of the data? The goal should be to corral as much data as possible and then use the power of machines to parse that data and spit it out in a digestible way.

Google showed the way

That’s what I mean when I say the Internet is for data. Aside from emailing people, the whole purpose of using the Internet is to sift through data and find the piece of data you want: the lowest price, the funniest video, the best movie. So as a service provider, the more data you can parse, the greater the chance you have of delivering the right piece of data to your customer. The key then is the parsing or search algorithm, not the curation method or the partnerships.

Another way of saying the Internet is for data is saying “the internet is about search”. And that’s why Google ate Yahoo’s lunch. They understood that robust sales channels, partnerships were not scalable even with slick interfaces and cutting edge technology. Search is infinitely scalable. What matters most is the robustness of the algorithm in delivering the search item – the lowest price, the funniest video, the best movie, or your long lost friend on a social network.

Robust search algorithms are inherently deflationary

Let me wrap up with this idea. Once you move from a point to point virtual world like the telephone into the firehose of data that is the Internet, the world has opened up to you. You can reach any company or any person that is connected. You can buy virtually any product or any service that those people and companies provide. That’s very empowering.

But it’s also deflationary. Suddenly, you are competing with any- and everyone to deliver a service or a good. And unless you offer something tangibly superior, you’re going to have to compete on price. That goes whether you’re a clothing company, a bookstore, a media company or a journalist.

Let me leave it there for now. I think you can see the hints of where I’m going with this already with the comments about price competition and journalism and about suspension of disbelief and the reliability of the form of communication. I see the Internet as highly disruptive. And I believe it’s a communication tool whose impact shouldn’t be underestimated.

More coming soon