The Internet Is a Hit-Driven Business

What the world needs now is love, sweet love, not another opinion about Facebook’s impending world domination via its little Like button. However, I feel compelled to proffer my humble theory on the Internet industry:

The Internet is a hit-driven business.

Let's compare bank accounts in 2020...

I’ve spent the past few years of my career observing and explaining trends on behalf of a major online media company. Tech pundits are constantly arguing about whether Internet Company X or Y is a technology company or a media company.

For investors, it means the difference between a growth stock and a value stock (or trap). For the companies themselves, it’s the difference between widespread innovation envy (reserved for tech companies, like Apple) and unadulterated derision (for media companies, like CBS). Ultimately, it doesn’t matter, and those with staying power are both: Any company that successfully distributes content or services online at massive scale is necessarily technologically proficient. They’re all beholden to the whims of a capricious consuming populace; they have to keep the hits coming to survive.

All Internet sites, services, applications, and memes are media of varying functionality and utility, peddling chunks of owned or third-party content. The roles of producer, creator/performer, and distributor blur online, but ultimately every starry-eyed engineer in a Silicon Valley garage is no different from the flailing teenage band in the car-hole next door—they’re all just trying to capture the hearts and minds of the masses. They’re trying to write a hit song.

Some hits are like Broadway plays—they’ll play for years and make a lot of money, but at some point only church buses full of nice old ladies from Dubuque will consume them (AOL, any mail client that isn’t Gmail). Some get huge for a while and then live on only in random, faraway markets, like the Canadian rockers Anvil (Friendster). Some soak up their 15 minutes and vanish, only to be occasionally revived by a VH1 memory-jogger, like Right Said Fred (Chatroulette, hopefully).

Some Internet-based entities crush it for years, steadily churning out best-selling, ever-evolving fare and becoming simultaneously loved and reviled, iconic, like U2 or Michael Jackson. This is Facebook.

The Like button, assuming it doesn’t cause a crippling mass user rebellion (which it might), is preface to Facebook serving every ad on the Internet. It won’t happen tomorrow, but it will happen. With everything Facebook knows about everyone and a talented sales force poached from everywhere, the company will defragment a painfully fragmented business and sell any ad spot for multiples more than could its attendant publisher. Advertisers will wince and whine as they dump truckloads of gold at the feet of King Zuckerberg.

Everyone hates Google, to the tune of nearly a billion users and $25 billion in annual revenue. I think Facebook will suffer a similar, lucrative fate.

Of course, nothing is certain in the dynamic online landscape. Facebook could be U2, or it could be Anvil. As Asia (the band, not the continent) and its energizing synthesized horns once declared, only time will tell.

Like This!

Add to FacebookAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to TwitterAdd to TechnoratiAdd to Yahoo BuzzAdd to Newsvine

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s