[This is a re-post (originally posted on 4 Nov 2012), deleted the original posts by mistake]
“Sticks and stones
will break my bones but words will never hurt me”. They do now!
Just ask any lawmakers exposed in Wikileaks!
We now know that
the internet is playing a major role in our life, unlike conjecture in the
early 90’s before commercialisation began.
Today, we ponder in terms of an internet economy, not eCommerce per se
but an economy where information becomes a commodity. This blog article (in four parts) contemplates
its effects.
You must have
noticed that Facebook, Wikipedia and Amazon operate in a somewhat different
sphere from today’s businesses and their online initiatives. They use business logic that is antithesis to
existing business models. If you have
studied how iconic internet companies work including these four, you’ll notice
that they apply methods, for lack of a better phrase, what I call internet rules,
to their business. Delve deeper and you
may observe that the rules are derived from the unique internet business model
which itself evolved from a culture that pervades the internet. Google and Facebook in particular singularly
cultivate the culture of the internet into their strategy. They seem to innately understand the
strategic significance. This blog is about the internet business model
that gives directions to the internet economy.
This and the
following five blog articles will consider the information economy. Then we will look into the ‘rules’, business
model, systems and culture that can be universally applied. And in later blogs, how they could apply to
and affect businesses, organisations and society at large.
We use Google,
LinkedIn and perhaps NationBuilder. They
are all information-based businesses and depend on user-generated content
through crowdsourcing, a unique scheme evolved from the internet. If Henry Ford’s car assembly lines created
the modern factory, crowdsourcing is the equivalent, creating an information
age factory, using data as raw material, manufacturing informational and
quasi-informational products. Since most
crowdsourced content is free, ‘free’ now has value. The latter, a dichotomy to the
traditionalists, needs to be understood and will be a subject of a future
piece.
The generation of
content in the internet first became evident with newsgroups (circa 1979)
intensifying with blogs (1994). And then
it accelerated with the introduction of the web (1993). In
1999 there were 23 blogs on the internet and by the middle of 2006, there were
50 million blogs according to Technorati’s State of the Blogosphere report. Free email services
like Hotmail added to it but they had no value then. Ditto gopher, the early ‘search’. The dot.com bubble (1996 to 2000) started the
monetisation process. Whilst it mostly
failed, it was not due to a fundamentally flawed model but of timing. After the blood letting, many gleefully said
their eulogy to internet companies but those were simply formative years, what
I call Internet 1.0. If you were a
student of history as I am, you would know that many imminent industries starts
with a financial crash during phase 1.0 of their development. You see it in the car industry, railways,
electricity that in fact alludes to an industry in the making. You know it was going to be the next big
thing! Tulip was an exception. It was also the start of the commoditisation
of information.
Yahoo subsequently
succeeded in first commoditising then monetising information with Google
accelerating it. Facebook looks likely
to take over the baton to hasten it even further. And Pinterest, the latest darling will not
cross the finishing line, the baton will be passed to others. (A future blog article discusses the internet
cycle, now at 30%.) The current internet
start-up fervour (in spite of the Facebook listing fiasco which I blame mostly
on the financial industry, not Facebook per se, and thus will continue) is
mostly around social media and information and indeed there is froth. Whether this becomes a bubble, some, a
smaller percentage will fail while others, a larger percentage, continue on the
fast lane, flipping the 80/20 pareto principle between Internet 1.0 and internet
2.0 phases. Internet 2.0 phase is
mainstream, not the cowboy frontier of the earlier one. Sure, there will be start-ups with half baked
schemes but this is mostly the natural progression of business now. It will be up to the investor to figure out
the bit that’s not but it’ll be unlike 1.0 when they treated start-ups as chips
in a casino. We have digressed but we
are simply going through the cycle, where commoditisation of information is an
early cause. This leads us to the
subject of economics (in Part
II).
©Chen Thet Ngian, InternetBusinessModelAsia.blogspot.com
(2012, 2013). Unauthorized use and/or
duplication of this material without express and written permission from this
blog’s author and/or owner is strictly prohibited. Excerpts and links may be
used, provided that full and clear credit is given to Chen Thet Ngian and InternetBusinessModelAsia.blogspot.com
with appropriate and specific direction to the original content.
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