EOF - Life in the Vast Lane
Back when the O'Reilly folks were pumping up “Web 2.0” as a meme—successfully, as it turned out—I was asked for some quotage on the subject. My reply, oft-quoted since, was “It's what we'll call the next crash.” I'm still sure about that prediction, in part because the Web 2.0 bubble is fed by the same kind of gas that inflated the dot-com bubble nearly a decade ago: a combination of exit-oriented venture investment and tech media fantasizing.
Back in the late '90s, everybody was talking up “portals”, and advertising was going to pay for everything. Now, in the getting-late '00s, everybody is talking up “social networks”, and advertising is going to pay for everything. As I write this, the Facebook social network has attracted a reported 50 million faces and has just announced plans to make money by somehow “monetizing” those faces' social connections. It's wacky stuff, but not wacky enough to scare away value-inflating buzz, especially by the Big Boy media.
Venture capitalists, now as then, angle their investments less toward revenues than toward get-rich IPOs or acquisitions by existing giants, such as Google and News Corp. Thanks to a complicated $250 million advertising deal with Microsoft, which also acquired a 1.6% share of Facebook—hottest of the social networks—the New York Times and CNN Money both figured that Facebook was suddenly worth $15 billion—a figure that went viral almost instantly. Never mind that Facebook's revenues were only $150 million. Never mind that the details of the Microsoft deal were not fully revealed, and that Microsoft had an obvious interest in pricing a potential Facebook acquisition beyond the reach of everybody, especially Google—a company whose stock price in November passed $724 per share, approaching a market cap of .25 trillion dollars. Both Facebook and Google are Web 2.0 companies with valuations inflated by bubble gas. Meet the new tank, same as the old tank.
One difference between the first bubble and this one is advertising. During the dot-com bubble, advertising was mostly promise. In the Web 2.0 bubble, advertising is delivering, big-time. But, can advertising pay for everything forever? More to the point of social networks, will on-line society put up with it? As Alan Patrick puts it, “Planet Advertising desperately wants to believe we will all trust all our 'friends' who start spamming us with ads, but they misunderstand the entire dynamic of trusted networks. We trust friends precisely because they don't do this sort of thing.”
The 50-million-member Facebook jury is out on that one, because Facebook's monetize-your-friendships system (code name: Beacon) isn't running yet. But, even if it works, it's still just advertising. In the long run, there's going to be a lot more money in helping demand find supply than in helping supply find (or create) demand—simply because the efficiencies involved in helping money-in-hand find places to go exceed the guesswork that defines advertising at its core. That even goes for Google, which introduced the radical notion of accountability, but still involves mountains of wasted placements (by countless Linux servers pushing gazillions of tiny text ads into the margins of blogs and search results). I'm not saying that advertising ends, by the way, just that its fate is to become part of an informational ecosystem that supports the buying intentions of customers at least as well as it supports the selling intentions of vendors.
Problem is, a symmetrical market ecosystem will have trouble emerging from a networked world optimized for cable television. Both cablecos and telcos have been pushing crippled asymmetrical “last mile” Internet service for the duration. They've shown little inclination (at least here in the US) toward supporting the Net's original end-to-end architecture, which supports abundant supply and abundant demand all over the place, and not just flowing down from a few industrial giants to a zillion “consumers”.
By focusing on battles between sell-side giants (even in the “social space”), big media hasn't helped. But, here and there we see exceptions. One example is a November 2007 Forbes column by Peter Huber titled “Web 50.0”. Here's an excerpt:
...digital life's two woeful deficiencies are both centered on the last yard of the network, where the bit meets the brain. Our eyes can process images far faster than the wire plugged in to the back of the box can deliver them. And our brains can crank out signals—through vocal cords or fingers—with far greater speed, dexterity and sensitivity than today's man-machine interfaces can match. This one area of computing is still stunningly primitive. Touch typing is a century old. A mouse is only a modest advance over a telegraph key.
But laser light channeled through glass fiber can move pictures faster than the eye can see. And with micromechanical and semiconductor sensors, it's now possible to build gloves as digitally sensitive as human hands, or systems that move the image on the screen in response to how you move your head and eyes. The digital revolution is now waiting for these technologies to converge and proliferate. Then the revolution starts all over again....
For a hint at what's to come, Huber says:
...sneak into your teenager's bedroom. Ignore the dusty Dell, Mac and even the iPhone—marvel instead at Microsoft's Xbox, Sony's PlayStation or Nintendo's Wii. For a preview of what you'll be doing on such a machine, don't waste time trying to type a letter—where's the keyboard, anyway?—or run a spreadsheet, or Google a search, or crawl through eBay or Amazon. Go kill someone in Halo 3.
What matters isn't that these are games. It's that they're live. They involve data-thick interaction in real time.
I've maintained for some time that the most important step forward in the Net's recent history is not the generational progression from 1.0 to 2.0, but the branching of the Live Web off the Static Web. The big challenge is building out the Live Web, and it's not one we should leave up to the Big Boys, even as we run it over their glass.
That's because the critical enabling feature of the Live Web won't be technical. It will be the moral and political feature we call freedom. That's not something the Big Boys are going to give us. It's something that comes from ourselves.
Doc Searls is Senior Editor of Linux Journal. He is also a Visiting Scholar at the University of California at Santa Barbara and a Fellow with the Berkman Center for Internet and Society at Harvard University.