Although the Internet has problems, it's still the fastest growing media platform with tons of potential.
By AMIR ORNIinternet logo 88(photo credit: )
Every now and then I hear businessmen, executives, or other media professionals, at times very high-ranked ones, declare that "with all due respect," the Internet has yet to prove itself. They argue that the business model is not clear enough and no one really knows how to make money out of this World Wide Web and where it's going anyway.
So, first of all I urge them to present this question to Niklas Zentrum (founder of Kazza and Skype) or Brad Greenspan (founder of Myspace) or Nahum Sharfman (founder of shopping.com) or Mark Zuckerberg (founder of facebook) or any other who made millions and sometimes even billions from the Internet industry.
Let's try to examine more thoroughly the issues of the unclear business model and where is it all heading.
The internet is a young industry. Very young. Only in the first half of the 1990s did it become available to the general public. The radio, just for the sake of comparison, was widely used already in the 1920s.
The Internet market is nascent and rapidly growing thanks to technological developments. Due to this rapid growth and a dynamic business environment, the way money is being generated constantly changes. Business models that were effective five years ago are not necessarily relevant today.
But the Internet is complying with the same rules as any other business, especially other media platforms, starting with newspapers, through radio and television all the way to the Internet. All aim at the same target - to attract as many eyes and / or ears (traffic!). When there is enough of that, it's time to start thinking of how to make money out of it, primarily by selling ad space (TV spots, banners, radio jingles or two inch newspaper ads).
And how do you generate traffic? Well, that is perhaps the most important question of all. The only way to do it, of course, is to create the most attractive content. That's why the most talented guys in the media industry are primarily the content guys, writers, editors and program managers who do nothing but generate traffic…
Still, there are few elements that distinguish the Web from other media platforms. One of these elements is interactivity - the fact the Internet is a two-way street, enabling users to take action, respond and generate content themselves. Another thing is that a lot of Web sites do not try to generate traffic and monetize it, but rather to provide niche, image and branding services etc.
But I'd like to focus on those sites that are primarily based on traffic and try to answer the million dollar question: is the Internet going to put an end to television? This takes me back to the same starting point I always find myself in - content. This is really the name of the game. The Internet is just a platform, another platform, enabling the end user to consume content. The internet is a result of technological evolution.
The question is where users will consume their content? And the answer to this is that the user doesn't' really care which kind of screen he is now watching his favorite TV show. It's not that the user would suddenly like other TV shows just because it's on youtube and not his cable company. Most people would prefer the Sopranos over watching dogs jumping in the air or an old guy slipping on a banana (the kind of content that is very popular on youtube nowadays).
Btw, if you'll look at the "traditional" content on youtube, Tom & Jerry for example, or just a clip of Michael Jackson, you'll see that they have millions of views, that is to say that users are looking for the same content they consumed on television.
It is likely that as part of the technological evolution, there would be some kind of mix between Web and TV platforms, while a lot of the content would be based on demand or PPV models and the screen would be the same for both platforms. Most of the leading TV content companies today will probably maintain their lead online, just because they are the most talented creators of content. Many channels toady are already implementing joint ventures with existing Internet platforms.
To conclude, it's true that the Internet still has many problems: banners are losing their effectiveness, video content is still very expensive and hasn't proved itself in terms of ROI (return on investment), and I guess there are still many challenges to deal with, but the bottom line is that this is the fastest growing industry today, generating billions of dollars and billions of potential users and clients. It changed and is still changing the face of global and local markets and whether the banners' CTR (click thru rate) is dropping, Internet business is rapidly growing and will continue growing in the coming years.
Amir Orni is the CEO of JPost.com.
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