At The Edge

Wired Magazine's powerful cover story:  The Web is Dead: Long Live the Internet

Excerpts

From Chris Anderson:

It is the cycle of capitalism. The story of industrial revolutions, after all, is a story of battles over control. A technology is invented, it spreads, a thousand flowers bloom, and then someone finds a way to own it, locking out others. It happens every time.

Take railroads. Uniform and open gauge standards helped the industry boom and created an explosion of competitors — in 1920, there were 186 major railroads in the US. But eventually the strongest of them rolled up the others, and today there are just seven — a regulated oligopoly. Or telephones. The invention of the switchboard was another open standard that allowed networks to interconnect. After telephone patents held by AT&T’s parent company expired in 1894, more than 6,000 independent phone companies sprouted up. But by 1939, AT&T controlled nearly all of the US’s long-distance lines and some four-fifths of its telephones. Or electricity. In the early 1900s, after the standardization to alternating current distribution, hundreds of small electric utilities were consolidated into huge holding companies. By the late 1920s, the 16 largest of those commanded more than 75 percent of the electricity generated in the US.

Indeed, there has hardly ever been a fortune created without a monopoly of some sort, or at least an oligopoly. This is the natural path of industrialization: invention, propagation, adoption, control.

Now it’s the Web’s turn to face the pressure for profits and the walled gardens that bring them. Openness is a wonderful thing in the nonmonetary economy of peer production. But eventually our tolerance for the delirious chaos of infinite competition finds its limits. Much as we love freedom and choice, we also love things that just work, reliably and seamlessly. And if we have to pay for what we love, well, that increasingly seems OK. Have you looked at your cell phone or cable bill lately?

From Michael Wolff:

According to Compete, a Web analytics company, the top 10 Web sites accounted for 31 percent of US pageviews in 2001, 40 percent in 2006, and about 75 percent in 2010. “Big sucks the traffic out of small,” Milner says. “In theory you can have a few very successful individuals controlling hundreds of millions of people. You can become big fast, and that favors the domination of strong people.”

Milner sounds more like a traditional media mogul than a Web entrepreneur. But that’s exactly the point. If we’re moving away from the open Web, it’s at least in part because of the rising dominance of businesspeople more inclined to think in the all-or-nothing terms of traditional media than in the come-one-come-all collectivist utopianism of the Web. This is not just natural maturation but in many ways the result of a competing idea — one that rejects the Web’s ethic, technology, and business models. The control the Web took from the vertically integrated, top-down media world can, with a little rethinking of the nature and the use of the Internet, be taken back.

This development — a familiar historical march, both feudal and corporate, in which the less powerful are sapped of their reason for being by the better resourced, organized, and efficient — is perhaps the rudest shock possible to the leveled, porous, low-barrier-to-entry ethos of the Internet Age. After all, this is a battle that seemed fought and won — not just toppling newspapers and music labels but also AOL and Prodigy and anyone who built a business on the idea that a curated experience would beat out the flexibility and freedom of the Web.

Techcrunch:

Andreessen once famously put the New York Times on deathwatch for its stubborn insistence on trying to save and prolong its legacy print business. With all the recent excitement in media quarters recently over Apple’s upcoming iPad and other tablet computers, and their potential to create a market for paid digital versions and subscriptions of newspapers and magazines, I wondered if Andreessen still felt the same way. Does he think the iPad will change anything?

Andreessen asked me if TechCrunch is working on an iPad app or planning on putting up a paywall. I gave him a blank stare. He laughed and noted that none of the newer Web publications (he’s an investor in the Business Insider) are either. “”All the new companies are not spending a nanosecond on the iPad or thinking of ways to charge for content. The older companies, that is all they are thinking about.”

But people pay for apps. Wouldn’t he pay for a beautiful touchscreen version of a magazine? Maybe, if it were something genuinely new that blew him away. It would have to be more than an article with video and graphics though. (I agree, otherwise it’s no better than a CD-ROM).

Oh, and he points out, that the iPad will have a “fantastic browser.” No matter how many iPads the Apple sells, the Web will always be the bigger market. “There are 2 billion people on the Web,” he says. “The iPad will be a huge success if it sells 5 million units.”

Despite trying time and again, Andreessen’s observation is that media companies have no aptitude for technology, nor do they really understand what technology companies do. The one thing technology companies do really well is deal with constant disruption. “Microsoft is going through this right now,” he points out, “Ballmer is not complaining about it.” He’s tackling it head on. So did Intel when Andy Grove gutted it to shift from memory chips to microprocessors. So does every technology company CEO. It is ingrained in the industry Andreessen comes from, so it is just obvious to him: “You are cruising along, and then technology changes. You have to adapt.” Media companies need to learn that lesson fast. To the extent that their products are now delivered and consumed as digital bits, they too are becoming technology companies.

Beyond the iPad, he believes that all the talk once again from big media companies about erecting paywalls or somehow charging for news, articles and video online is shortsighted at best. He comes back to the simple fact that the open Web is where the users are. Talking about paywalls and paid apps is like saying, “We know where the market is and we are not going to go there.” Print newspapers and magazines will never get there, he argues, until they burn the boats and shut down their print operations. Yes, there are still a lot of people and money in those boats—billions of dollars in revenue in some cases. “At risk is 80% of revenues and headcount,” Andreessen acknowledges, “but shift happens.” You’d have to be crazy to burn the boats. Crazy like Cortes.

That's key, because if the virality coefficient is 1, the start-up will grow, but at a linear rate, eventually topping out.  Above 1, it achieves exponential growth. The table, created by Jeremy Liew, a venture capitalist with Lightspeed Venture Partners, an investor in RockYou, illustrates the difference a tiny increase in the viral coefficient can make, showing relative growth rates based on a viral coefficient of .6, .9, and 1.2.  Liew started wtih a base of ten member and defined time as the period it takes for a member to invite others, which he estimated could be anywhere from two and eight weeks.  Starting with 10 members and a viral coefficient of .6, you flatten out at 25 people, a gain of 15 users.  At .9, you end up with 75 new members and growth slows dramatically.  With a viral coefficient of 1.2, however, those same 10 people yield 1,271 additional users (see Table 1).  Expressed in a line graph, a viral coefficient of 1.2 takes on the form of an exponential curve (Fig. 3).

-- Viral Loop: from Facebook to Twitter, How Today's Smartest Businesses Grow Themselves, Adam L. Penenberg, Hyperion, New York, 2009, p. 56

From The 'Web Squared' Era by O'Reilly and Pahlka, http://j.mp/JlJxM

It is not simply the popularity of Web 2.0 offerings that accounts for this increase, though the hockey stick growth of platforms like Twitter and Facebook is certainly dramatic. There's also a qualitative change happening as the Web becomes more closely integrated with the real world via sensor-based smart phone applications. Web Squared is another way of saying "Web meets World."

The first generation of Web 2.0 applications harnessed the collective intelligence of users typing on keyboards. Whether it was links and clicks (Google), articles and edits of shared knowledge (Wikipedia) or votes (Digg), the application was driven by explicit human actions. Five years in, collective intelligence applications are increasingly driven by cascades of sensor data being thrown off by devices, often without explicit human intervention. Today’s smartphones contain microphones and cameras, as well as motion, proximity, location, and direction sensors. They have their own eyes, ears, and sense of touch. Revolutionary new applications connect those senses to cloud databases and programs running on massive server farms.

The scale, nature and speed of the data change what we mean by collective intelligence. Consider the obvious use case: internet-connected GPS applications that have built-in feedback loops, reporting your speed and using it to estimate your arrival time based on its knowledge of traffic ahead of you.

Where the Web Squared world gets really interesting, though, is when applications use all the senses of a device, coordinating them much like the human brain coordinates our senses, to draw conclusions that would be difficult with one sense alone. The Google Mobile Application for the iPhone detects the movement of the phone to your ear, and automatically goes into speech recognition mode. It uses its microphone to listen to your voice and decodes what you say by referencing not only its speech recognition algorithms but what it expects to hear you say based on the most frequent search terms in Google's search database. The phone also makes good use of GPS or cell-tower triangulation to detect its location. A search for "pizza," for example, returns the result you most likely want: the name, location and contact information for the three nearest pizza restaurants.