The Internet:
What Everyone Should Know

(Survival Basics)

by Robert B. Marqusee



Part III: Commercialization of the Internet: Economic Opportunity in the New Media


The economic impact of the Internet on global society is significant: the Internet is said to have created 1.1 million jobs in 1996 (1). One study estimates that over $92 billion will be spent on Internet technologies alone by the year 2000 (2); this does not include the billions in various consumer "e-commerce" purchases by the year 2000(3). Quantifying the number of users on the Internet today (4)- it is estimated that 36 million people in the U.S. will regularly use the Internet in 1997, with 200 million people world-wide by the year 2000(5).

The Internet will be ubiquitous and will permeate, in one form or another, every sector of our economy. (See: Philosophical Model for Understanding Internet Related Developments in Part II). It would be literally impossible to detail all the economic opportunities created by the Internet; however, in keeping with the spirit of this series of articles, the reader should be left with an understanding of the 'basics', or a high-level perspective, of the direction of economic opportunities created by the Internet. Therefore, the subject will be broken down into the following digestible segments:

  1.   General: Determining the Scope of Opportunity
  2.   Technology & Telecommunications
  3.   Business: Goods and Services
  4.   Future: "What's Next"

General: Determining the Opportunity

By analogy, how has the invention of the automobile impacted society? We can analyze the economic impact with these non-mutually exclusive classifications:

The key is: inherent in the nature of the automobile was pure "potential" of opportunity. If a person had understood this potential, that person could have foreseen the opportunity and capitalized on it; and many individuals did just that.

The emergence of the Internet provides enormous opportunities within each of these classifications. Opportunities = Potential of Internet Fulfilling Marketable Needs minus Pre-Internet Situational Deficiencies. The benefits (i.e., potential) of the Internet are:

Theoretically, a dentist in a small town in Iowa who has a specialty could publish it on the Internet for a world-wide exposure, collaborate online with other experts in the field, market the skills to individuals or groups, research the competition or state of similar procedures, and could keep a digital record of all matters related to this endeavor. The dentist would not, as were the circumstances before the Internet, have to seek editorial approval of a trade publication, or incur the expense of television advertising or producing a mass-marketed print publication. The dentist has just "extended" the business from rural America to the world using the Internet.

In reality, some of the opportunities associated with the Internet have already been implemented; such as, online tracking of package deliveries, pooling of public and university library resources, and news delivery services. We have only touched the surface of innovation which promises to hold a very long life of increasing economic benefits. The Information Age is still in its infancy.

Technology & Telecommunications

The Internet was able to emerge because of the pre-existence of computers and communication networks - these industries are now transforming into ultimate "dependency" industries and "extending" their capabilities to meet the new demands created by the Internet. We can, of course, anticipate "government adaptation" and resulting "social economies".


Telecommunications Technology
Key Area: Consumer Access/Bandwidth Key Area: Convergence
  • Telephone, Satellite, Cable, Wireless
  • Consumer & PC Products:
    PC/TV; WebPhones; Intercast, Etc
Network Infrastructure & Services
  • Application Development:
    Corporate Intranets & Extranets;
    Network Resident Applications
  • Routers, Filters, Switches & Packet Service Devices
  • Marketing:
    (See: Business, Manufacturing and Services, Below)
  • Internet Dial-Tone
Computer & Network Hardware/Software:
  • Technologies for Quality of Service
  • Desktop, Portable, Mobile, NC
  • Business Model
  • Corporate Network Technologies
Convergence:
  • Security/Authentication Technologies
  • Network & Broadcast Delivery
  • Entertainment/Interactive Software/ Push Technologies/Filters/Directories
Digital Technologies (Internet Motivated)
  • Sensors, Digital Photography,
    Financial (SmartCards, etc.)

Telecommunications "bandwidth" is to the Internet like highways are to auto travel; the larger the data pipe, the faster more information can travel to consumers. The industry has to figure out the answers to four big questions: 1.) What is the most profitable, least capital extensive, and practical method to provide increased bandwidth; 2.) How to technologically capture money from data packet communications; 3.) What will the market support in terms of fees; and 4.) How will the government regulate the industry? You can count on one thing: there will be a ton of money to be made by suppliers of the nuts and bolts of telecommunications.

The computer industry needs to penetrate into a greater number of homes and reduce computer hardware, software and maintenance costs in corporations. By combining PC technology with typical consumer products (e.g., TV's and telephones), and "pushing" or "webcasting" customized consumer "content" (i.e., news, entertainment & education), the Internet will go more places than just the computer screen. Because the Internet is a medium that can deliver all present forms of data (text, graphics, audio and video), telecommunications companies will have to provide greater bandwidth to handle the load for "on demand" information.

The challenges in each of these areas is astounding: inventing data compression technologies (i.e., to push more information over limited telephone lines and satellite transmissions), developing a business model for Internet transmissions, "security" technologies for assuring authentication and identification (e.g., e-commerce or financial transactions, corporate communications, and individual privacy), network manageability (e.g., distinguishing between voice calls and data transmissions, domain table maintenance), proxy-cache technology, software development (e.g., Intranet tools, design programs, firewall technology, encryption technologies, ad infinitum), and developing presently unknown, but related, technologies.


Business: Goods and Services

The availability of goods and services for sale on the Internet introduces a powerful channel that will certainly compete with many traditional localized, or "geographically" based, businesses. The proliferation of Internet-channeled businesses provides a significant increase of choices to the consumer. Where once a buyer would travel downtown, or to a local "mall", to find a needed item from a limited stock or selection of brands, a buyer can now go online to find sellers from all over the world competing for the same business. The sellers benefit because they expand their markets from geographical limitations (i.e., capital intensive storefronts, distribution and inventory costs), and buyers benefit because they have more competitive choices.

The number one goal for sellers of goods or services is to be able to communicate availability of a product to the largest number of buyers as possible. In order to achieve that goal on the Internet, there must be a "critical mass" of online buyers. To increase the number of "online" buyers, the Internet must be "easily and readably" accessible to consumers; thus, the overwhelming drive to produce "convergence" products (e.g., combining televisions with computers). A "dependency cycle" is born: computer and consumer electronics manufacturers produce and sell Internet capable products, permitting more people to buy goods online, thus creating more demand for additional computer or convergence type products. There is a marriage of technology with an unlimited consumer market - feeding each other to an ever increasing spiral of sales.

While it is easy to get carried away with delusions of Internet-channel grandeur, most businesses can get immediate benefit from the Internet by forming or joining professional online associations, or making sure that their goods or services can be easily found through one of the many online directory services. Like the example of the "Dentist from Iowa" provided above, we still live in the physical world - but we can take advantage of this new medium to not only broaden our market audience, but also to offer others, wherever situated, our special knowledge or gifts which could contribute to make their world a better place.


Marketing

The common requirement for all businesses to succeed on the Internet is "Marketing". Effective marketing of goods or services on the Internet can transform any existing business. Marketing, together with an "online ordering system", will open a powerful channel for increased sales (i.e., "e-commerce") - online shopping provides customers with unprecedented convenience and comparative choices.

Online merchants are using Internet technologies to market their products in three basic ways:

The One to One Future, by Don Peppers and Martha Rogers, Ph.D. is a book which explores the new personalized relationship between a merchant and a customer through electronic empowerment. A customer becomes known, individually, by the merchant and can be introduced to other customers who have similar interests.

The technology permits merchants to collect specific information about the customer and then tailor future communications with that customer directly addressing that customer's interests. E-mail notifications of new products or, for the broader interests, a TV type computer channel that delivers targeted information directly to the interested consumer's computer desktop; the desktop thus becomes the highly valuable real estate. Technologies, like that produced by Firefly (http://www.firefly.net), collect information from a consumer and match his or her interests to others who have similar tastes; a virtual community of people with similar interests recommending products to each other. Finally, many online merchants are seeking to enhance their offerings by providing customers with 'premium content' or support options either through the use of push technologies or having the information available at the merchant's web site.


For the Rest of Us

Economic opportunity on the Internet does not confine itself to the 'merchant-consumer' relationship. There are enormous opportunities associated with helping traditional businesses and professions take advantage of the Internet (i.e., 'extending' the business):

This list certainly does not exhaust the possibilities for economic opportunities in every field. The rest of us do not have to be expert direct markets to extend our business; we still have the ability to publish and deliver information, form high profile associations, and generally become known to the small, but vitally important, peers in our trade. There will not be one occupation untouched by the advent of the 'information age'.


Future: "What's Next"

The future of technological innovation, and general use of the Internet, is limited by the demands of our own humanity. Just because we build it does not mean that they will come. H umanity is having to redefine itself in light of their new capabilities - both by what we demand as individuals and by the policies established by government (i.e., encryption, taxation, censorship, etc.). What is important to us in both spheres: physical space and cyberspace?

The physical space is filled with 'vested interests' and conflicting proprietary standards of communication. Governments are naturally inclined to defend its borders and create internal policies which may or may not be conducive to the emergence of a 'non-geographical' cyber-nation. People still like to read a local newspaper - on paper - and feel insecure about trusting personal information to a computer located in another land which is operated by someone they do not "know". To be sure, the outcome of this dialectical dance between the potential of the Internet verses the pressures to maintain the essential socio-economic remnant, our geographic selves, is far from determined.

We may desire, as individuals, only to purchase certain goods on the Internet (e.g., books, compact discs, or computers), or we may insist on the social experience of the local Mall to buy our clothes or visit a café-bookstore to sip espresso, browse through books, while listening to New Age music. For most people, computers will be used as a pervasive tool - but not a lifestyle.

Computing lacks the sensory delights of nature, taste, smell or touch. This is why the there will be a re-emergence of our geographic selves to claim that space we know very well. Merchants will combine traditional media and web marketing, and the role of local storefronts may evolve to more of a physical display of goods not held in local inventory. As with any change, there will be some winners and some losers.

Merchants will continue to struggle with developing new technologies, creating content and forming online relationships to entice consumers. However, the primary utility of the Internet comes from individuals and businesses using the Internet to enhance and extend their capabilities and value - to communicate.

Economic opportunities abound for imaginative and realistic individuals who can tap into the direction of development in this Information Age.


Where to Now?

We will, in the next article, turn to the how the Internet effects us socially, religiously, psychologically, legally and politically.

1. http://www.itaa.org

2. http://www.idcresearch.com/EI/gens10.htm

3. See: President Clinton's The Framework for Global Electronic Commerce, July 1, 1997, located at http://www.whitehouse.gov/WH/New/Commerce/

4. See: Donna L. Hoffman and Thomas P. Novak, Owen School of Management - Vanderbilt University, are well-regarded for providing information and analysis of Internet Statistics, use and marketing: http://www2000.ogsm.vanderbilt.edu/papers/internet_demos_july9_1996.html

5. See the U.S. Supreme Court Opinion in the case of Janet Reno vs. American Civil Liberties Union, June 26, 1997, located at http://www.aclu.org/court/renovacludec.html