Net benefit: how the Internet is transforming our World

Net benefit: how the Internet is transforming our
world1
John Naughton2
There’s a lovely Latin phrase – terra firma. It means “solid
earth”. It’s the basis for a metaphor we use a lot. We talk
approvingly about someone who has “his feet on the ground”, and
disparagingly about people who are “not properly earthed”. For
us, the earth, the ground, is something dependable, something
fixed, something immutable.
And yet for years I lived in Cambridge three doors away from a
man named Dan McKenzie who believed otherwise. Dan was a
geophysicist who thought that, far from being fixed and
immutable, the ground on which we stood was shifting. He was the
leading scientist in a small group who formulated, in 1967, the
theory of plate tectonics – the view that the earth’s surface is
comprised of a number of giant plates which are constantly in
motion, colliding with or sliding along one another.3 When they
push against one another, huge mountain ranges are created.
That’s how we got the Himalayas. And when plates scrape against
one another, as for example along the San Andreas fault in
California, we get earthquakes or tsunamis.
As it happened, Dan was right. His view of how the earth
behaves is now accepted as the truth. So while our terra may be
appear to be firma, actually it’s moving, with consequences which
1 Copyright information: this is an edited version of the Annual Lecture of the
UK Marketing Society, delivered on 28 February, 2006 at the Science Museum,
London. The text is licensed under a Creative Commons Attribution-
NonCommercial-NoDerivs 2.5 License, which means that it can be freely
reproduced in unchanged form for non-commercial use provided the authorship is
acknowledged. See http://creativecommons.org for details.
2 Professor of the Public Understanding of Technology, the Open University,
Milton Keynes MK7 6AA. Email: j.j.naughton@open.ac.uk.
3 http://www.agu.org/inside/awards/bios/mckenzie_dan.html
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2
are sometimes terrible – as we saw in the Asian tsunami of Boxing
Day, 2004.
There’s a simple and obvious moral here and it is this: even
when you think things are immutable, you may be wrong. Huge
changes may be taking place under our feet, but only our
grandchildren will see them clearly. Which is no consolation to
us, because we will be dead and gone by that time.
What I want to do this evening is to apply this philosophy to
thinking about our communications environment. My conjecture is
that huge, tectonic shifts are under way in this environment;
that these changes have momentous implications for our society
and its industries; and that we currently lack the tools or the
inclination to think coherently about the phenomenon.
What do I mean by “momentous implications”? Well, to
illustrate it I want you to join me in a little thought
experiment.
I want you to close your eyes and think back to 1993.
The year is 1993. John Major is Prime Minister. The Tories
are in government. Tony Blair still looks like Bambi. Bill
Clinton has just become President of the United States. Nobody’s
heard of Monica Lewinsky. Germany is still a prosperous country.
Mercedes are still the most reliable cars around. Only grown-ups
have mobile phones. Nobody – but nobody – outside of academic and
research labs has an email address. And a URL – now that is
something really exotic! Amazon is a river in South America. A
googol is the technical term for an enormous number – 1 followed
by one hundred zeroes. eBay and iPod are typos. An instant
message is something you send via a chap on a motorbike. RyanAir
is a small Irish airline which flies to airports nobody has ever
heard of. Oh, and there are quaint little shops on the High
Street called “travel agents”.
Now, open your eyes and spool forward to the present. Hands
up who doesn’t have an email address. Hands up who doesn’t use
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Google. Hands up anyone whose company doesn’t have a web site.
When was the last time you saw a white van on the motorway that
didn’t have www.something.com on the back? Who hasn’t bought
books or records from Amazon? Who hasn’t thought of bidding for
something on eBay? Anyone who hasn’t booked a flight on the Web?
How many people here haven’t ordered groceries via Tesco online?
I could go on but you will get the point. 2006 is only
thirteen years on from 1993. Why did I pick that year? Because
1993 was the year that the World Wide Web took off. It had
actually been invented three years earlier by Tim Berners-Lee,
but the spring of 2003 was when the first graphical browser was
launched and the Web became something that ordinary human beings
could understand and use.4
The rest, as they say, is history. Today, nobody knows how
big the Web is. When it stopped publishing the number, Google
was claiming to index 8 billion pages, but everyone knows that
was just the tip of the iceberg. Some sensible people are
claiming that the web is 400 times bigger than the number of
pages indexed by Google. 400 times 8 is 3,200. So a publication
medium which contains over 3,000 billion pages has come into
being in little over a decade, and it’s growing by maybe 25,000
pages an hour. This is a revolutionary transformation of our
environment by any standards.
What does this mean?
The honest answer is that we haven’t a clue, and to see why I
want you to join me in another little thought experiment.
Think back to the year 1455. Why 1455? Well that was the year
when a peculiar guy living in Mainz in Germany, name of
Gutenberg, published the bible he had created using a fancy
invention called moveable type. It was the world’s first printed
book.
4 see John Naughton, A Brief History of the Future: the origins of the Internet,
London, 1999, Phoenix.
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Printing was a revolutionary transformation of mankind’s
communications environment. Up to then, books were strictly a
minority sport – the preserve of a tiny, rich and powerful elite,
centred on the Church and the aristocracy. But in time, printing
created the modern world. It undermined the authority of the
Catholic church, enabled the Reformation and the Enlightenment,
powered the rise of nationalism and of modern science, created
new social classes and stimulated the creation of the educational
system we still rely on today.
It even changed our conception of ‘childhood’ as a protected
phase in people’s lives. Before print, the definition of
adulthood was when a child reached the point where it was
competent to participate in an oral culture. In the Middle Ages,
that age was seven – which is why the Catholic Church defined
seven as the ‘age of reason’, the age at which a person could be
deemed responsible for their behaviour. (That’s why you never
see children in a Breughel painting – you just see small adults.)
But in a print-based culture, it took longer to get kids to the
point where they could competently participate in the business of
life. So ‘childhood’ was extended effectively until the age of
14 – which as you know was the original school-leaving age.5
Now all of this flowed from Gutenberg’s invention in 1455.
But neither he nor his contemporaries could have had any idea
what it would lead to. And if you imagine a MORI pollster going
around Mainz in 1468 with a clipboard and asking citizens for
their opinion of what the long term impact of the technology
would be, well you can see how absurd the idea is.
All of which leads me to formulate Naughton’s First Law. It
says that we invariably over-estimate the short-term implications
of new communications technologies, and we greviously underestimate
their long term impacts.
5 See Neil Postman, The Disappearance of Childhood, Vintage, 1994.
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The great Internet Bubble of 1995 – 2000 was based on crazy
over-estimates of short-term impacts leading to what one
economist memorably christened “irrational exuberance”6. But
we’ve been though all that, and emerged sadder, poorer and I hope
wiser. Now is the time to turn to longer-term implications.
So in what follows I’m going to think aloud about what these
might be. And the reason I’ve gone on at some length about
printing is to provide a health warning. I don’t know what the
future holds any more than the next academic. But what I can do
is suggest some ways of thinking about it.
~oOo~
The conventional way of thinking about this stuff is what the
computer scientist John Seely Brown7 calls “endism” – the
perspective that sees new technologies as replacing or even
wiping out older ones. Thus at the moment we see a great deal of
angst in the newspaper business about whether online news sites
will wipe out newspapers. Well, maybe they will, but that has
more to do with classified advertising than with news. The truth
is that the interactions between old and new communications
technologies are actually very complex.
For example, when the CD-ROM arrived, people predicted the
demise of the printed book. It didn’t happen. In fact, books
are doing quite nicely. When TV arrived, people predicted the
end of radio and indeed of movies. It didn’t happen. Radio and
movies are doing quite nicely, thank you. TV news was going to
wipe out newspapers. It didn’t happen. And so on.
But at the same time something happened. Although the CD-ROM
didn’t wipe out the printed book it did change forever the
prospects for expensive reference works. Remember Encyclopedia
6 Robert J Schiller: Irrational Exuberance, Princeton University Press, 2000.
7 John Seely Brown and Andrew Duguid: The Social Life of Information, Harvard
Business School Press, 2000. See
http://www.sociallifeofinformation.com/toc.htm for contents and downloadable
chapters.
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Brittannica? And as for videotapes and DVD, well the movie
studios now make more revenue from them than they do from
cinemas. And so on.
So where do we find an intellectual framework which captures
the complexity of these interactions? The answer was suggested
many years ago by the late Neil Postman, a Professor at New York
University who was the most perceptive critic of media and
communications technology since Marshall McLuhan. In a series of
witty and thought-provoking books – with titles like Teaching as
a Subversive Activity, Amusing Ourselves to Death, The
Disappearance of Childhood and Technopoly -- Postman described
how our societies are shaped by their prevailing modes of
communication, and fretted about the consequences.
In seeking a language in which to talk about change, I’ve
borrowed an idea from Postman – the notion of media ecology, that
is to say, the study of media as environments. The term is
borrowed from the sciences, where an ecosystem is defined as a
dynamic system in which living organisms interact with one
another and with their environment.8 These interactions can be
very complex and take many forms. Organisms prey on one another;
compete for food and other nutrients; have parasitic or symbiotic
relationships; wax and wane; prosper and decline. And an
ecosystem is never static. The system may be in equilibrium at
any given moment, but the balance is precarious. The slightest
perturbation may disturb it, resulting in a new set of
interactions and movement to another – temporary – point of
equilibrium.
This seems to me to be a more insightful way of viewing our
communications environment than the conventional ‘market’
metaphor commonly used in public discussion, because it comes
closer to capturing the complexity of what actually goes on in
real life.
8 W.B. Clapham: Natural Ecosystems, New York, Macmillan, 1973.
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A good illustration of ecological adaptation comes from the
interaction between television and newspapers in the UK. There
came a point – sometime in the late 1950s – when more people in
Britain got their news from TV than from newspapers. This
created a crisis for the papers. How should they respond to the
threat? Well, basically they reacted in two different ways. The
popular papers – the ones with mass circulations and readers
lower down the social scale -- essentially became parasitic
feeders on television and the cult of celebrity that it spawned.
(They’re now also parasitic feeders on Premiership football.)
The broadsheets, for their part, decided that if they could no
longer be the first with the news, then they would instead become
providers of comment, analysis and, later, of features. In other
words, television news did not wipe out British newspapers. But
it forced them to adapt and move to a different place in the
ecosystem.
The ‘organisms’ in our media ecosystem include broadcast and
narrowcast television, movies, radio, print and the Internet
(which itself encompasses the Web, email and peer-to-peer
networking of various kinds). For most of our lives, the
dominant organism in this system – the one that grabbed most of
the resources, revenue and attention – was broadcast TV. Note
that ‘broadcast’ implies few-to-many: a relatively small number
of broadcasters, transmitting content to billions of essentially
passive viewers and listeners.
This ecosystem is the media environment in which most of us
grew up. But it’s in the process of radical change.
How come? Answer: because broadcast TV is in inexorable
decline. Its audience is fragmenting. Twenty years ago, a show
like The Two Ronnies could attract audiences of up to 20 million
in the UK. Now an audience of five million is considered a
stupendous success by any television channel. In five years’
time, 200,000 viewers will be considered a miracle.
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Broadcast TV is being eaten from within: the worm in the bud
in this case is narrowcast digital television -- in which
specialist content is aimed at specialised, subscription-based
audiences and distributed via digital channels. But waiting in
the wings is something even more devastating – Internet Protocol
TV (IPtv) – which is technospeak for television on demand,
delivered to consumers via the Internet. And it’s coming fairly
soon to a computer monitor near you.
The trouble for broadcast TV is that its business model is
based on its ability to attract and hold mass audiences. Once
audiences become fragmented, the commercial logic erodes.
And that’s not all. New technologies like Personal Video
Recorders (PVRs) – essentially recorders which use hard drives
rather than tape and are much easier to program – are enabling
viewers to determine their own viewing schedules and – more
significantly – to avoid advertisements. Think of Sky Plus.
Think of TiVO. As the CEO of Yahoo said recently at the Consumer
Electronics Show in Las Vegas, the era of “appointment-to-view”
TV is coming to an end.
Note that when I say that broadcast TV is declining, I am NOT
saying that it will disappear. That’s what John Seely Brown
calls “endism’ and it’s not the way ecologists think. Broadcast
will continue to exist, for the simple and very good reason that
some things are best covered using a few-to-many technology.
Only a broadcast model can deal with something like a World Cup
final or a major terrorist attack, for example – when the
attention of the world is focussed on a single event or a single
place. But broadcast will lose its dominant position in the
ecosystem, and that is the change that I think will have really
profound consequences for us all.
~oOo~
What will replace broadcast TV as the new dominant organism in
our media ecosystem? Simple: the ubiquitous Internet.
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Note that I do not say the Web. The biggest mistake people in
the media business make is to think that the Net and the Web are
synonymous.
They’re not. Of course the Web – as I intimated earlier -- is
enormous, but it’s just one kind of traffic that runs on the
Internet’s tracks and signalling. And already the Web is being
dwarfed by other kinds of traffic. According to data gathered by
the Cambridge firm Cachelogic, peer-to-peer networking traffic
now exceeds Web traffic by a factor of between two and ten,
depending on the time of day. And I’ve no doubt that in ten
years’ time, P2P traffic will be outrun by some other ingenious
networking application, as yet undiscovered.
Already the signs of the Net’s approaching centrality are
everywhere. We see it, for example,
• in the astonishing penetration of broadband access in
developed countries,
• in the explosive growth of e-commerce,
• in the streaming of audio – and, increasingly, video
across the Net,
• in the sudden interest of Rupert Murdoch and other
broadcasters in acquiring broadband companies,
• in declining newspaper sales and the growth of online
news
• and in the stupendous growth of internet telephony –
spurred by the realisation that, sooner rather than
later, all voice telephony will be done over the Net.9
9 “It is now no longer a question of whether VOIP will wipe out traditional
telephony, but a question of how quickly it will do so. People in the industry
are already talking about the day, perhaps only five years away, when telephony
will be a free service offered as part of a bundle of services as an incentive
to buy other things such as broadband access or pay-TV services. VOIP, in
short, is completely reshaping the telecoms landscape.” Economist, 15
September, 2005.
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Oh and I almost forgot to mention the looming implications
of Radio Frequency Identity (RFID) technology, together with Wi-
Fi and mesh networking.
And then there’s the fact that you can now buy episodes of
popular US TV series on the Apple iTunes store, download them
onto your computer – and watch them on your sparkling new Video
iPod.
Oh and there’s BBC Radio’s “listen again” facility, whereby if
you miss a programme (the Archers, say) you can always click on a
link and have it streamed to your computer at a time that suits
you.
And I haven’t mentioned, have I, that you can do the same for
24 hours with BBC2’s Newsnight programme?
And of course there’s Google, a phenomenon that deserves an
entire lecture to itself.
~oOo~
What does this mean?
Well, first of all, these developments illustrate the extent
to which the Internet is becoming central to our lives.
In 1999, Andy Grove, who was then the CEO of Intel, made a
famous prediction. In five years’ time, he said, all companies
will be Internet companies or they won’t be companies at all.10
At the time, people laughed. Did he mean that every hamburger
joint and hardware store would have to be online by 2004? What a
ridiculous idea!
In fact it was an exceedingly insightful prediction. What
Grove meant was that the Internet would move from being something
rather exotic to being a kind of utility like electricity or the
telephone. None of us today could envisage being in business
without making use of both. As the Economist, put it,
10 Economist, 24 June, 1999
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“The Internet is helping companies to lower costs
dramatically across their supply and demand chains, take
their customer service into a different league, enter new
markets, create additional revenue streams and redefine
their business relationships. What Mr Grove was really
saying was that if in five years’ time a company is not
using the Internet to do some or all of these things, it
will be destroyed by competitors who are.”11
The point of all this is that while we grew up and came to
maturity in a media ecosystem dominated by broadcast TV, our
children and grandchildren will live in an environment dominated
by the Net. And the interesting question – the point, in a way,
of this lecture – is what will that mean for us, and for them?
~oOo~
In thinking about the future, the two most useful words are
‘push’ and ‘pull’ because they capture the essence of where we’ve
been and where we’re headed.
Broadcast TV is a ‘push’ medium. By that I mean that a
relatively select band of producers (broadcasters) decide what
content is to be created, create it and then push it down
analogue or digital channels at audiences which are assumed to
consist of essentially passive recipients.
The couch potato was, par excellence, a creature of this
world. He did, of course, have some freedom of action. He could
choose to switch off the TV; but if he decided to leave it on,
then essentially his freedom of action was confined to choosing
from a menu of options decided for him by others, and to
‘consuming’ their content at times decided by them. He was, in
other words, a human surrogate for one of BF Skinner’s pigeons –
free to peck at whatever coloured lever took his fancy, but not
free at all in comparison with his fellow-pigeon perched outside
on the roof.
11 ibid.
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The other essential feature of the world of push media was its
fundamental asymmetry. All the creative energy was assumed to be
located at one end (the producer/broadcaster). The viewer or
listener was assumed to be incapable of, or uninterested in,
creating content; and even if it turned out that he was capable
of creative activity, there was no way in which anything he
produced could have been published.
Looking back, the most astonishing thing about the broadcastdominated
world was how successful it was for so long in keeping
billions of people in thrall. Networks could pull in audiences
in the tens of millions for successful and popular broadcasts –
and pitch their advertising rates accordingly. Small wonder that
one owner of a UK ITV franchise (I think it was Roy Thompson)
described commercial television (in public) as “a licence to
print money”.
But in fact the dominance of the push model was an artefact of
the state of technology. Analogue transmission technology
severely limited the number of channels that could be broadcast
through the ether, so consumer choice was restricted by the laws
of analogue electronics. The advent of (analogue) cable and
satellite transmission and, later, digital technology changed all
that and began to hollow-out the push model from within.
The Internet – and particularly the Web – is exactly the
opposite of this. The Web is a pull medium. Nothing comes to
you unless you choose it and click on it to ‘pull’ it down onto
your computer. You’re in charge. In the words of Rupert
Murdoch’s daughter, Elizabeth, the Web is a “sit up” medium, in
contrast to TV, which is a “sit back” medium.
So the first implication of the switch from push to pull is a
radical increase in consumer sovereignty. We saw this early on
in e-commerce, because it became easy to compare online prices
and locate the most competitive suppliers from the comfort of
your own armchair. Just one illustration: over 80 per cent of
prospective customers nowadays turn up at Ford dealerships in the
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US armed not only with information about particular models, but
also with detailed data on the prices that dealers elsewhere in
the country are charging for those models.12
We’re now seeing this in other areas too – for example in the
way prospective students click their way through the websites of
competing universities while deciding which ones to apply to.
But the Internet doesn’t just enable people to become more
fickle and choosy consumers. It also makes them much better
informed – or at least provides them with formidable resources
with which to become more knowledgeable. Search technology is
the key to this. In an interesting recent book, The Search, John
Battelle describes the dramatic effects that search engines like
Google are having on the advertising and marketing industries.
“In the past few years”, he writes, “search has become a
universally understood method of navigating our
information universe: much as the Windows interface
defined our interactions with the personal computer,
search defines our interactions with the Internet. Put a
search box in front of just about anybody, and he’ll know
what to do with it. And the aggregate of all those
searches, it turns out, is knowable: it constitutes the
database of our intentions”. 13
The Internet and related communications technologies are
making people more connected. The average person today interacts
with far more people than her father did. As the Economist puts
it in a recent article:
“A famous 1967 study by Stanley Milgram (which
later became the basis for a film) suggested that
there were at most “six degrees of separation”
between any two people in America, meaning that the
12 “Crowned at last”, Economist, 31 March, 2005.
13 John Battelle, The Search: How Google and Its Rivals Rewrote the Rules of
Business and Transformed Our Culture, Portfolio, 2005, page 4.
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chain of acquaintances between them never had more
than six links. According to more recent work along
similar lines, that number has now fallen to 4.6,
despite the growth in America's population since
Milgram's study. Being able to keep in touch with a
much wider range of people through technologies
such as e-mail has brought everyone closer.”14
The Internet is also making it much harder for companies to
keep secrets. If one of your products has flaws, or if a service
you provide is sub-standard, then the chances are that the news
will appear somewhere on a Blog or a posting to a newsgroup or
email list. There was a celebrated case of this some time ago
with Kryptonite bike locks which – it turned out – could be
opened by anyone equipped with a Bic biro. The company knew of
the flaw, but did nothing until news of it was published on a
cycling website. And then all hell broke loose.15
And in the last few months, the giant Sony corporation has
been crucified because of the discovery – first published on a
Blog – that copy-protection software on Sony music disks was
covertly installing software on customers’ PCs which could
compromise their security. It’s not clear exactly when Sony had
become aware of the problem but when the story finally broke --
on a techie’s Blog -- the company’s various inept attempts at
denial and damage-limitation were relentlessly exposed and
discredited by enraged consumers hunting in virtual packs.16
My conjecture therefore is that nobody who offers a public
service will be immune from this aspect of a ubiquitous Net. And
with every day that passes we see other examples. Take for
instance the maddening hypocrisy of companies whose call centres
14 “The New Organisation”, Economist, 21 January, 2006.
15 “Lock, stock and caught over a barrel”, Observer, 26 September, 2004. Online
at: http://observer.guardian.co.uk/business/story/0,6903,1312736,00.html
16 See “How Sony became an Ugly Sister”, Observer, 18 December, 2005. Online at
http://observer.guardian.co.uk/business/story/0,6903,1669722,00.html
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give you a recorded message saying that they really value your
call and then drag you through a Kafkaesque maze for 20 minutes
before you get even a chance to talk to a human being. There’s
now a useful website17 on which users post the key codes needed to
bypass the maze. For Citibank in the US, for example, the
sequence you need is 0#0#0#0#0#0#! And the name of this site?
Why www.gethuman.com
Some years ago, I gave a presentation at a seminar in
Addenbrooke’s Hospital in Cambridge on the future of information
technology and how it might affect the health service.
The thing I remember most from the event is a statement made
by a quietly-spoken medical researcher from the National
Institute of Health. The biggest challenge General Practitioners
will face in 2010, he said, was “how to deal with the Internetinformed
patient”.
And I don’t think he was joking.
The emergence of a truly sovereign, informed consumer is thus
one of the implications of an Internet-centric world. The days
when companies could assume that the only really demanding
customers they were likely to encounter were those who subscribed
to Which? are over.
Another implication is that the asymmetry of the old, pushmedia
world may be replaced by something much more balanced.
Remember that the underlying assumption of the old broadcast
model was that audiences are passive and uncreative.
What we’re now discovering is that that passivity and apparent
lack of creativity may have been more due to the absence of tools
and publication opportunities than to intrinsic defects in human
nature. Certainly, that’s the only explanation I can think of
for what’s been happening on the Net in the last few years.
17 http://www.gethuman.com/us/
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Take Blogging – the practice of keeping an online diary.
There are millions and millions of the things – when I last
checked the other night Technorati, a Blog-tracking service, was
claiming to be monitoring over 28.9 million, and the number of
them is doubling every five and a half months. The current
creation rate is 75,000 a day – that’s about one a second.18 Many
of them are, as you might expect, mere dross – vanity publishing
with no discernible literary or intellectual merit. But
something like 13 million Blogs were still being updated three
months after their initial creation, and many of them contain
writing and thinking of a very high order. In my own areas of
professional interest, for example, Blogs are always my most
trusted online sources, because I know many of the people who
write them, and some of them are world experts in their fields.19
What is significant about the Blogging phenomenon is its
demonstration that the traffic in ideas and cultural products
isn’t a one-way street – as it was in the old push-media ecology.
People have always been thoughtful and articulate and wellinformed,
but up to now relatively few of them ever made it past
the gatekeepers who controlled access to publication media.
Blogging software and the Internet gave them the platform they
needed – and boy have they grasped the opportunity!
The other remarkable explosion of creativity comes from
digital photography. In the last few years an enormous number of
digital cameras have been sold – and of course many mobile phones
now come with an onboard camera. The trend is so pronounced that
even the biggest names in photography are getting out of film.
Kodak decided to stop making film cameras some time ago.
Recently, Nikon announced that it was planning the same thing.
18 Dave Sifri, “State of the Blogosphere, February 2006”, online at
http://technorati.com/weblog/2006/02/81.html
19 For example, Professor Ed Felten of Princeton, a leading expert on digital
rights management, encryption and related issues whose Blog
(http://www.freedom-to-tinker.com/) is a must-read for anyone interested in
these arcane but important matters.
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And Konica Minolta has now announced that it too is going
completely digital.
So every day, millions of digital photographs are taken.
Until the advent of a site called Flickr.com, an understandable
response to this statement would have been “so what?” But Flickr
allows people to upload their pictures and display them on the
Web, each neatly resized and allocated its own unique URL. And
it has grown like crazy – to the point where it was acquired by
Yahoo20 in March 2005 for an undisclosed pile of serious money.
I don’t know how many photographs Flickr holds, but it already
run into many millions.21 For me, the most interesting aspect of
it is that users are encouraged to attach tags to their pictures,
and these tags can be used as the basis for searches of the
entire database. The other day I searched for photographs tagged
with ‘Ireland’ and came up with 122,000 images! (A month
earlier, the same search had come up with 85,000.) Of course I
didn’t sift through them all, but I must have looked at a few
hundred. They were mostly holiday and casual snapshots, but here
and there were some truly beautiful images. What struck me most,
though, was what they represented. Ten years ago, those
snapshots would have wound up in a shoebox and would certainly
never have been seen in a public forum. But now they can be –
and are being – published, shared with others, made available to
the world. And this is something new. And something important
for those of us who aspire to reach audiences with our messages.
~oOo~
What I’m really trying to say is that the world has changed
out of all recognition already. And if I’m right about the
20 “A Flickr of the digital camera switch and the folksonomy system is born”,
Observer, 27 November, 2005. Online at:
http://observer.guardian.co.uk/business/story/0,6903,1651448,00.html
21 In December 2004, Salon.com was reporting 2.2 million and growing at a rate
of 30,000 per day. See http://www.salon.com/tech/feature/2004/12/20/flickr/.
These estimates are now seriously out of date.
UK Marketing Society Keynote Address: 28 February, 2006
18
analogy with printing, this is just the beginning. We ain’t seen
nothin’ yet.
Now it would be impertinent of me to try to spell out what all
this might mean for you. You know your own business best. But
here’s a salutary tale and a closing thought.
The thought is that no industry can afford to ignore what’s
going on, even if it thinks that the Internet is nothing to do
with it.
If you want a case study of this, consider what happened to
the music industry.
In the early 1980s, recorded music went digital with the
arrival of the compact disk. Recording studios pumped out music
as streams of ones and zeroes; and at the consumer end, CD
players translated those ones and zeroes back into sounds. The
problem was: how to get those ones and zeroes – those digital
bitstreams – from studio to player. The solution was to burn the
bits onto plastic disks and distribute those to consumers. That
meant making the disks, burning the music onto them, printing
labels, packing them into boxes (which always seemed to break),
packing the boxes into bigger boxes, putting those on pallets,
loading the pallets onto trucks, delivering them to warehouses,
who then delivered them to retailers, who took the disks out of
the boxes and put the boxes on display and… I could go on, but
you will see what a wasteful, inefficient, brain-dead way that
was for distributing a product.
Nevertheless, the record industry built a very cosy business
out of this. There was one small problem: the economics of
producing and shipping disks meant that there was little
commercial mileage in selling single tracks, so the industry
focussed on selling albums and increasingly ignored the consumer
demand for tracks. And it might have continued doing this
forever, but for one thing: the Internet.
UK Marketing Society Keynote Address: 28 February, 2006
19
In 1999 a disaffected music lover called Shawn Fanning sat
down and wrote some software which enabled people easily to
locate and share music tracks over the Net. He called it
Napster. Within 18 months, Napster had 80 million subscribers,
swapping millions of tracks every hour of every day. The music
industry eventually got Napster shut down, but by then the genie
was out of the bottle. And even today, as I speak, millions of
music tracks are being illicitly shared across the Net (remember
that CacheLogic survey of Internet traffic), and the only hope
for the music industry is to fall in with the legal downloading
services offered by companies like Apple with its iTunes Store.
Since it opened the store, Apple has sold a million tracks a day,
and last week celebrated the sale of its billionth song.
One of the defensive arguments used by the record companies to
justify their existence – not to mention their stock options --
was that only they could find and nurture talent. Without them,
so they implied, the Rolling Stones and U2 would still be playing
in pubs, clubs and student raves. Well, I don’t know if you’ve
heard of a Sheffield band called the Arctic Monkeys, but I’m
willing to bet your kids have. They’ve suddenly become the
biggest band in Britain. And they did it by releasing their
music – free – on their website, and letting fans spread it by
word of mouth. Eventually a record label came begging to be
allowed to take them on. It is bands like Arctic Monkeys, not
record companies, that are the future of the music business.
Nobody is indispensable any more.
The moral of the story is that you ignore changes in the
communications ecology at your peril. Remember what Andy Grove
said all those years ago. Companies that are not Internet
companies won’t be companies at all.


For information getting:UK Marketing Society Keynote Address: 28 February, 2006
1
Net benefit: how the Internet is transforming our
world1
John Naughton2
There’s a lovely Latin phrase – terra firma. It means “solid
earth”. It’s the basis for a metaphor we use a lot. We talk
approvingly about someone who has “his feet on the ground”, and
disparagingly about people who are “not properly earthed”. For
us, the earth, the ground, is something dependable, something
fixed, something immutable.
And yet for years I lived in Cambridge three doors away from a
man named Dan McKenzie who believed otherwise. Dan was a
geophysicist who thought that, far from being fixed and
immutable, the ground on which we stood was shifting. He was the
leading scientist in a small group who formulated, in 1967, the
theory of plate tectonics – the view that the earth’s surface is
comprised of a number of giant plates which are constantly in
motion, colliding with or sliding along one another.3 When they
push against one another, huge mountain ranges are created.
That’s how we got the Himalayas. And when plates scrape against
one another, as for example along the San Andreas fault in
California, we get earthquakes or tsunamis.
As it happened, Dan was right. His view of how the earth
behaves is now accepted as the truth. So while our terra may be
appear to be firma, actually it’s moving, with consequences which
1 Copyright information: this is an edited version of the Annual Lecture of the
UK Marketing Society, delivered on 28 February, 2006 at the Science Museum,
London. The text is licensed under a Creative Commons Attribution-
NonCommercial-NoDerivs 2.5 License, which means that it can be freely
reproduced in unchanged form for non-commercial use provided the authorship is
acknowledged. See http://creativecommons.org for details.
2 Professor of the Public Understanding of Technology, the Open University,
Milton Keynes MK7 6AA. Email: j.j.naughton@open.ac.uk.
3 http://www.agu.org/inside/awards/bios/mckenzie_dan.html
UK Marketing Society Keynote Address: 28 February, 2006
2
are sometimes terrible – as we saw in the Asian tsunami of Boxing
Day, 2004.
There’s a simple and obvious moral here and it is this: even
when you think things are immutable, you may be wrong. Huge
changes may be taking place under our feet, but only our
grandchildren will see them clearly. Which is no consolation to
us, because we will be dead and gone by that time.
What I want to do this evening is to apply this philosophy to
thinking about our communications environment. My conjecture is
that huge, tectonic shifts are under way in this environment;
that these changes have momentous implications for our society
and its industries; and that we currently lack the tools or the
inclination to think coherently about the phenomenon.
What do I mean by “momentous implications”? Well, to
illustrate it I want you to join me in a little thought
experiment.
I want you to close your eyes and think back to 1993.
The year is 1993. John Major is Prime Minister. The Tories
are in government. Tony Blair still looks like Bambi. Bill
Clinton has just become President of the United States. Nobody’s
heard of Monica Lewinsky. Germany is still a prosperous country.
Mercedes are still the most reliable cars around. Only grown-ups
have mobile phones. Nobody – but nobody – outside of academic and
research labs has an email address. And a URL – now that is
something really exotic! Amazon is a river in South America. A
googol is the technical term for an enormous number – 1 followed
by one hundred zeroes. eBay and iPod are typos. An instant
message is something you send via a chap on a motorbike. RyanAir
is a small Irish airline which flies to airports nobody has ever
heard of. Oh, and there are quaint little shops on the High
Street called “travel agents”.
Now, open your eyes and spool forward to the present. Hands
up who doesn’t have an email address. Hands up who doesn’t use
UK Marketing Society Keynote Address: 28 February, 2006
3
Google. Hands up anyone whose company doesn’t have a web site.
When was the last time you saw a white van on the motorway that
didn’t have www.something.com on the back? Who hasn’t bought
books or records from Amazon? Who hasn’t thought of bidding for
something on eBay? Anyone who hasn’t booked a flight on the Web?
How many people here haven’t ordered groceries via Tesco online?
I could go on but you will get the point. 2006 is only
thirteen years on from 1993. Why did I pick that year? Because
1993 was the year that the World Wide Web took off. It had
actually been invented three years earlier by Tim Berners-Lee,
but the spring of 2003 was when the first graphical browser was
launched and the Web became something that ordinary human beings
could understand and use.4
The rest, as they say, is history. Today, nobody knows how
big the Web is. When it stopped publishing the number, Google
was claiming to index 8 billion pages, but everyone knows that
was just the tip of the iceberg. Some sensible people are
claiming that the web is 400 times bigger than the number of
pages indexed by Google. 400 times 8 is 3,200. So a publication
medium which contains over 3,000 billion pages has come into
being in little over a decade, and it’s growing by maybe 25,000
pages an hour. This is a revolutionary transformation of our
environment by any standards.
What does this mean?
The honest answer is that we haven’t a clue, and to see why I
want you to join me in another little thought experiment.
Think back to the year 1455. Why 1455? Well that was the year
when a peculiar guy living in Mainz in Germany, name of
Gutenberg, published the bible he had created using a fancy
invention called moveable type. It was the world’s first printed
book.
4 see John Naughton, A Brief History of the Future: the origins of the Internet,
London, 1999, Phoenix.
UK Marketing Society Keynote Address: 28 February, 2006
4
Printing was a revolutionary transformation of mankind’s
communications environment. Up to then, books were strictly a
minority sport – the preserve of a tiny, rich and powerful elite,
centred on the Church and the aristocracy. But in time, printing
created the modern world. It undermined the authority of the
Catholic church, enabled the Reformation and the Enlightenment,
powered the rise of nationalism and of modern science, created
new social classes and stimulated the creation of the educational
system we still rely on today.
It even changed our conception of ‘childhood’ as a protected
phase in people’s lives. Before print, the definition of
adulthood was when a child reached the point where it was
competent to participate in an oral culture. In the Middle Ages,
that age was seven – which is why the Catholic Church defined
seven as the ‘age of reason’, the age at which a person could be
deemed responsible for their behaviour. (That’s why you never
see children in a Breughel painting – you just see small adults.)
But in a print-based culture, it took longer to get kids to the
point where they could competently participate in the business of
life. So ‘childhood’ was extended effectively until the age of
14 – which as you know was the original school-leaving age.5
Now all of this flowed from Gutenberg’s invention in 1455.
But neither he nor his contemporaries could have had any idea
what it would lead to. And if you imagine a MORI pollster going
around Mainz in 1468 with a clipboard and asking citizens for
their opinion of what the long term impact of the technology
would be, well you can see how absurd the idea is.
All of which leads me to formulate Naughton’s First Law. It
says that we invariably over-estimate the short-term implications
of new communications technologies, and we greviously underestimate
their long term impacts.
5 See Neil Postman, The Disappearance of Childhood, Vintage, 1994.
UK Marketing Society Keynote Address: 28 February, 2006
5
The great Internet Bubble of 1995 – 2000 was based on crazy
over-estimates of short-term impacts leading to what one
economist memorably christened “irrational exuberance”6. But
we’ve been though all that, and emerged sadder, poorer and I hope
wiser. Now is the time to turn to longer-term implications.
So in what follows I’m going to think aloud about what these
might be. And the reason I’ve gone on at some length about
printing is to provide a health warning. I don’t know what the
future holds any more than the next academic. But what I can do
is suggest some ways of thinking about it.
~oOo~
The conventional way of thinking about this stuff is what the
computer scientist John Seely Brown7 calls “endism” – the
perspective that sees new technologies as replacing or even
wiping out older ones. Thus at the moment we see a great deal of
angst in the newspaper business about whether online news sites
will wipe out newspapers. Well, maybe they will, but that has
more to do with classified advertising than with news. The truth
is that the interactions between old and new communications
technologies are actually very complex.
For example, when the CD-ROM arrived, people predicted the
demise of the printed book. It didn’t happen. In fact, books
are doing quite nicely. When TV arrived, people predicted the
end of radio and indeed of movies. It didn’t happen. Radio and
movies are doing quite nicely, thank you. TV news was going to
wipe out newspapers. It didn’t happen. And so on.
But at the same time something happened. Although the CD-ROM
didn’t wipe out the printed book it did change forever the
prospects for expensive reference works. Remember Encyclopedia
6 Robert J Schiller: Irrational Exuberance, Princeton University Press, 2000.
7 John Seely Brown and Andrew Duguid: The Social Life of Information, Harvard
Business School Press, 2000. See
http://www.sociallifeofinformation.com/toc.htm for contents and downloadable
chapters.
UK Marketing Society Keynote Address: 28 February, 2006
6
Brittannica? And as for videotapes and DVD, well the movie
studios now make more revenue from them than they do from
cinemas. And so on.
So where do we find an intellectual framework which captures
the complexity of these interactions? The answer was suggested
many years ago by the late Neil Postman, a Professor at New York
University who was the most perceptive critic of media and
communications technology since Marshall McLuhan. In a series of
witty and thought-provoking books – with titles like Teaching as
a Subversive Activity, Amusing Ourselves to Death, The
Disappearance of Childhood and Technopoly -- Postman described
how our societies are shaped by their prevailing modes of
communication, and fretted about the consequences.
In seeking a language in which to talk about change, I’ve
borrowed an idea from Postman – the notion of media ecology, that
is to say, the study of media as environments. The term is
borrowed from the sciences, where an ecosystem is defined as a
dynamic system in which living organisms interact with one
another and with their environment.8 These interactions can be
very complex and take many forms. Organisms prey on one another;
compete for food and other nutrients; have parasitic or symbiotic
relationships; wax and wane; prosper and decline. And an
ecosystem is never static. The system may be in equilibrium at
any given moment, but the balance is precarious. The slightest
perturbation may disturb it, resulting in a new set of
interactions and movement to another – temporary – point of
equilibrium.
This seems to me to be a more insightful way of viewing our
communications environment than the conventional ‘market’
metaphor commonly used in public discussion, because it comes
closer to capturing the complexity of what actually goes on in
real life.
8 W.B. Clapham: Natural Ecosystems, New York, Macmillan, 1973.
UK Marketing Society Keynote Address: 28 February, 2006
7
A good illustration of ecological adaptation comes from the
interaction between television and newspapers in the UK. There
came a point – sometime in the late 1950s – when more people in
Britain got their news from TV than from newspapers. This
created a crisis for the papers. How should they respond to the
threat? Well, basically they reacted in two different ways. The
popular papers – the ones with mass circulations and readers
lower down the social scale -- essentially became parasitic
feeders on television and the cult of celebrity that it spawned.
(They’re now also parasitic feeders on Premiership football.)
The broadsheets, for their part, decided that if they could no
longer be the first with the news, then they would instead become
providers of comment, analysis and, later, of features. In other
words, television news did not wipe out British newspapers. But
it forced them to adapt and move to a different place in the
ecosystem.
The ‘organisms’ in our media ecosystem include broadcast and
narrowcast television, movies, radio, print and the Internet
(which itself encompasses the Web, email and peer-to-peer
networking of various kinds). For most of our lives, the
dominant organism in this system – the one that grabbed most of
the resources, revenue and attention – was broadcast TV. Note
that ‘broadcast’ implies few-to-many: a relatively small number
of broadcasters, transmitting content to billions of essentially
passive viewers and listeners.
This ecosystem is the media environment in which most of us
grew up. But it’s in the process of radical change.
How come? Answer: because broadcast TV is in inexorable
decline. Its audience is fragmenting. Twenty years ago, a show
like The Two Ronnies could attract audiences of up to 20 million
in the UK. Now an audience of five million is considered a
stupendous success by any television channel. In five years’
time, 200,000 viewers will be considered a miracle.
UK Marketing Society Keynote Address: 28 February, 2006
8
Broadcast TV is being eaten from within: the worm in the bud
in this case is narrowcast digital television -- in which
specialist content is aimed at specialised, subscription-based
audiences and distributed via digital channels. But waiting in
the wings is something even more devastating – Internet Protocol
TV (IPtv) – which is technospeak for television on demand,
delivered to consumers via the Internet. And it’s coming fairly
soon to a computer monitor near you.
The trouble for broadcast TV is that its business model is
based on its ability to attract and hold mass audiences. Once
audiences become fragmented, the commercial logic erodes.
And that’s not all. New technologies like Personal Video
Recorders (PVRs) – essentially recorders which use hard drives
rather than tape and are much easier to program – are enabling
viewers to determine their own viewing schedules and – more
significantly – to avoid advertisements. Think of Sky Plus.
Think of TiVO. As the CEO of Yahoo said recently at the Consumer
Electronics Show in Las Vegas, the era of “appointment-to-view”
TV is coming to an end.
Note that when I say that broadcast TV is declining, I am NOT
saying that it will disappear. That’s what John Seely Brown
calls “endism’ and it’s not the way ecologists think. Broadcast
will continue to exist, for the simple and very good reason that
some things are best covered using a few-to-many technology.
Only a broadcast model can deal with something like a World Cup
final or a major terrorist attack, for example – when the
attention of the world is focussed on a single event or a single
place. But broadcast will lose its dominant position in the
ecosystem, and that is the change that I think will have really
profound consequences for us all.
~oOo~
What will replace broadcast TV as the new dominant organism in
our media ecosystem? Simple: the ubiquitous Internet.
UK Marketing Society Keynote Address: 28 February, 2006
9
Note that I do not say the Web. The biggest mistake people in
the media business make is to think that the Net and the Web are
synonymous.
They’re not. Of course the Web – as I intimated earlier -- is
enormous, but it’s just one kind of traffic that runs on the
Internet’s tracks and signalling. And already the Web is being
dwarfed by other kinds of traffic. According to data gathered by
the Cambridge firm Cachelogic, peer-to-peer networking traffic
now exceeds Web traffic by a factor of between two and ten,
depending on the time of day. And I’ve no doubt that in ten
years’ time, P2P traffic will be outrun by some other ingenious
networking application, as yet undiscovered.
Already the signs of the Net’s approaching centrality are
everywhere. We see it, for example,
• in the astonishing penetration of broadband access in
developed countries,
• in the explosive growth of e-commerce,
• in the streaming of audio – and, increasingly, video
across the Net,
• in the sudden interest of Rupert Murdoch and other
broadcasters in acquiring broadband companies,
• in declining newspaper sales and the growth of online
news
• and in the stupendous growth of internet telephony –
spurred by the realisation that, sooner rather than
later, all voice telephony will be done over the Net.9
9 “It is now no longer a question of whether VOIP will wipe out traditional
telephony, but a question of how quickly it will do so. People in the industry
are already talking about the day, perhaps only five years away, when telephony
will be a free service offered as part of a bundle of services as an incentive
to buy other things such as broadband access or pay-TV services. VOIP, in
short, is completely reshaping the telecoms landscape.” Economist, 15
September, 2005.
UK Marketing Society Keynote Address: 28 February, 2006
10
Oh and I almost forgot to mention the looming implications
of Radio Frequency Identity (RFID) technology, together with Wi-
Fi and mesh networking.
And then there’s the fact that you can now buy episodes of
popular US TV series on the Apple iTunes store, download them
onto your computer – and watch them on your sparkling new Video
iPod.
Oh and there’s BBC Radio’s “listen again” facility, whereby if
you miss a programme (the Archers, say) you can always click on a
link and have it streamed to your computer at a time that suits
you.
And I haven’t mentioned, have I, that you can do the same for
24 hours with BBC2’s Newsnight programme?
And of course there’s Google, a phenomenon that deserves an
entire lecture to itself.
~oOo~
What does this mean?
Well, first of all, these developments illustrate the extent
to which the Internet is becoming central to our lives.
In 1999, Andy Grove, who was then the CEO of Intel, made a
famous prediction. In five years’ time, he said, all companies
will be Internet companies or they won’t be companies at all.10
At the time, people laughed. Did he mean that every hamburger
joint and hardware store would have to be online by 2004? What a
ridiculous idea!
In fact it was an exceedingly insightful prediction. What
Grove meant was that the Internet would move from being something
rather exotic to being a kind of utility like electricity or the
telephone. None of us today could envisage being in business
without making use of both. As the Economist, put it,
10 Economist, 24 June, 1999
UK Marketing Society Keynote Address: 28 February, 2006
11
“The Internet is helping companies to lower costs
dramatically across their supply and demand chains, take
their customer service into a different league, enter new
markets, create additional revenue streams and redefine
their business relationships. What Mr Grove was really
saying was that if in five years’ time a company is not
using the Internet to do some or all of these things, it
will be destroyed by competitors who are.”11
The point of all this is that while we grew up and came to
maturity in a media ecosystem dominated by broadcast TV, our
children and grandchildren will live in an environment dominated
by the Net. And the interesting question – the point, in a way,
of this lecture – is what will that mean for us, and for them?
~oOo~
In thinking about the future, the two most useful words are
‘push’ and ‘pull’ because they capture the essence of where we’ve
been and where we’re headed.
Broadcast TV is a ‘push’ medium. By that I mean that a
relatively select band of producers (broadcasters) decide what
content is to be created, create it and then push it down
analogue or digital channels at audiences which are assumed to
consist of essentially passive recipients.
The couch potato was, par excellence, a creature of this
world. He did, of course, have some freedom of action. He could
choose to switch off the TV; but if he decided to leave it on,
then essentially his freedom of action was confined to choosing
from a menu of options decided for him by others, and to
‘consuming’ their content at times decided by them. He was, in
other words, a human surrogate for one of BF Skinner’s pigeons –
free to peck at whatever coloured lever took his fancy, but not
free at all in comparison with his fellow-pigeon perched outside
on the roof.
11 ibid.
UK Marketing Society Keynote Address: 28 February, 2006
12
The other essential feature of the world of push media was its
fundamental asymmetry. All the creative energy was assumed to be
located at one end (the producer/broadcaster). The viewer or
listener was assumed to be incapable of, or uninterested in,
creating content; and even if it turned out that he was capable
of creative activity, there was no way in which anything he
produced could have been published.
Looking back, the most astonishing thing about the broadcastdominated
world was how successful it was for so long in keeping
billions of people in thrall. Networks could pull in audiences
in the tens of millions for successful and popular broadcasts –
and pitch their advertising rates accordingly. Small wonder that
one owner of a UK ITV franchise (I think it was Roy Thompson)
described commercial television (in public) as “a licence to
print money”.
But in fact the dominance of the push model was an artefact of
the state of technology. Analogue transmission technology
severely limited the number of channels that could be broadcast
through the ether, so consumer choice was restricted by the laws
of analogue electronics. The advent of (analogue) cable and
satellite transmission and, later, digital technology changed all
that and began to hollow-out the push model from within.
The Internet – and particularly the Web – is exactly the
opposite of this. The Web is a pull medium. Nothing comes to
you unless you choose it and click on it to ‘pull’ it down onto
your computer. You’re in charge. In the words of Rupert
Murdoch’s daughter, Elizabeth, the Web is a “sit up” medium, in
contrast to TV, which is a “sit back” medium.
So the first implication of the switch from push to pull is a
radical increase in consumer sovereignty. We saw this early on
in e-commerce, because it became easy to compare online prices
and locate the most competitive suppliers from the comfort of
your own armchair. Just one illustration: over 80 per cent of
prospective customers nowadays turn up at Ford dealerships in the
UK Marketing Society Keynote Address: 28 February, 2006
13
US armed not only with information about particular models, but
also with detailed data on the prices that dealers elsewhere in
the country are charging for those models.12
We’re now seeing this in other areas too – for example in the
way prospective students click their way through the websites of
competing universities while deciding which ones to apply to.
But the Internet doesn’t just enable people to become more
fickle and choosy consumers. It also makes them much better
informed – or at least provides them with formidable resources
with which to become more knowledgeable. Search technology is
the key to this. In an interesting recent book, The Search, John
Battelle describes the dramatic effects that search engines like
Google are having on the advertising and marketing industries.
“In the past few years”, he writes, “search has become a
universally understood method of navigating our
information universe: much as the Windows interface
defined our interactions with the personal computer,
search defines our interactions with the Internet. Put a
search box in front of just about anybody, and he’ll know
what to do with it. And the aggregate of all those
searches, it turns out, is knowable: it constitutes the
database of our intentions”. 13
The Internet and related communications technologies are
making people more connected. The average person today interacts
with far more people than her father did. As the Economist puts
it in a recent article:
“A famous 1967 study by Stanley Milgram (which
later became the basis for a film) suggested that
there were at most “six degrees of separation”
between any two people in America, meaning that the
12 “Crowned at last”, Economist, 31 March, 2005.
13 John Battelle, The Search: How Google and Its Rivals Rewrote the Rules of
Business and Transformed Our Culture, Portfolio, 2005, page 4.
UK Marketing Society Keynote Address: 28 February, 2006
14
chain of acquaintances between them never had more
than six links. According to more recent work along
similar lines, that number has now fallen to 4.6,
despite the growth in America's population since
Milgram's study. Being able to keep in touch with a
much wider range of people through technologies
such as e-mail has brought everyone closer.”14
The Internet is also making it much harder for companies to
keep secrets. If one of your products has flaws, or if a service
you provide is sub-standard, then the chances are that the news
will appear somewhere on a Blog or a posting to a newsgroup or
email list. There was a celebrated case of this some time ago
with Kryptonite bike locks which – it turned out – could be
opened by anyone equipped with a Bic biro. The company knew of
the flaw, but did nothing until news of it was published on a
cycling website. And then all hell broke loose.15
And in the last few months, the giant Sony corporation has
been crucified because of the discovery – first published on a
Blog – that copy-protection software on Sony music disks was
covertly installing software on customers’ PCs which could
compromise their security. It’s not clear exactly when Sony had
become aware of the problem but when the story finally broke --
on a techie’s Blog -- the company’s various inept attempts at
denial and damage-limitation were relentlessly exposed and
discredited by enraged consumers hunting in virtual packs.16
My conjecture therefore is that nobody who offers a public
service will be immune from this aspect of a ubiquitous Net. And
with every day that passes we see other examples. Take for
instance the maddening hypocrisy of companies whose call centres
14 “The New Organisation”, Economist, 21 January, 2006.
15 “Lock, stock and caught over a barrel”, Observer, 26 September, 2004. Online
at: http://observer.guardian.co.uk/business/story/0,6903,1312736,00.html
16 See “How Sony became an Ugly Sister”, Observer, 18 December, 2005. Online at
http://observer.guardian.co.uk/business/story/0,6903,1669722,00.html
UK Marketing Society Keynote Address: 28 February, 2006
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give you a recorded message saying that they really value your
call and then drag you through a Kafkaesque maze for 20 minutes
before you get even a chance to talk to a human being. There’s
now a useful website17 on which users post the key codes needed to
bypass the maze. For Citibank in the US, for example, the
sequence you need is 0#0#0#0#0#0#! And the name of this site?
Why www.gethuman.com
Some years ago, I gave a presentation at a seminar in
Addenbrooke’s Hospital in Cambridge on the future of information
technology and how it might affect the health service.
The thing I remember most from the event is a statement made
by a quietly-spoken medical researcher from the National
Institute of Health. The biggest challenge General Practitioners
will face in 2010, he said, was “how to deal with the Internetinformed
patient”.
And I don’t think he was joking.
The emergence of a truly sovereign, informed consumer is thus
one of the implications of an Internet-centric world. The days
when companies could assume that the only really demanding
customers they were likely to encounter were those who subscribed
to Which? are over.
Another implication is that the asymmetry of the old, pushmedia
world may be replaced by something much more balanced.
Remember that the underlying assumption of the old broadcast
model was that audiences are passive and uncreative.
What we’re now discovering is that that passivity and apparent
lack of creativity may have been more due to the absence of tools
and publication opportunities than to intrinsic defects in human
nature. Certainly, that’s the only explanation I can think of
for what’s been happening on the Net in the last few years.
17 http://www.gethuman.com/us/
UK Marketing Society Keynote Address: 28 February, 2006
16
Take Blogging – the practice of keeping an online diary.
There are millions and millions of the things – when I last
checked the other night Technorati, a Blog-tracking service, was
claiming to be monitoring over 28.9 million, and the number of
them is doubling every five and a half months. The current
creation rate is 75,000 a day – that’s about one a second.18 Many
of them are, as you might expect, mere dross – vanity publishing
with no discernible literary or intellectual merit. But
something like 13 million Blogs were still being updated three
months after their initial creation, and many of them contain
writing and thinking of a very high order. In my own areas of
professional interest, for example, Blogs are always my most
trusted online sources, because I know many of the people who
write them, and some of them are world experts in their fields.19
What is significant about the Blogging phenomenon is its
demonstration that the traffic in ideas and cultural products
isn’t a one-way street – as it was in the old push-media ecology.
People have always been thoughtful and articulate and wellinformed,
but up to now relatively few of them ever made it past
the gatekeepers who controlled access to publication media.
Blogging software and the Internet gave them the platform they
needed – and boy have they grasped the opportunity!
The other remarkable explosion of creativity comes from
digital photography. In the last few years an enormous number of
digital cameras have been sold – and of course many mobile phones
now come with an onboard camera. The trend is so pronounced that
even the biggest names in photography are getting out of film.
Kodak decided to stop making film cameras some time ago.
Recently, Nikon announced that it was planning the same thing.
18 Dave Sifri, “State of the Blogosphere, February 2006”, online at
http://technorati.com/weblog/2006/02/81.html
19 For example, Professor Ed Felten of Princeton, a leading expert on digital
rights management, encryption and related issues whose Blog
(http://www.freedom-to-tinker.com/) is a must-read for anyone interested in
these arcane but important matters.
UK Marketing Society Keynote Address: 28 February, 2006
17
And Konica Minolta has now announced that it too is going
completely digital.
So every day, millions of digital photographs are taken.
Until the advent of a site called Flickr.com, an understandable
response to this statement would have been “so what?” But Flickr
allows people to upload their pictures and display them on the
Web, each neatly resized and allocated its own unique URL. And
it has grown like crazy – to the point where it was acquired by
Yahoo20 in March 2005 for an undisclosed pile of serious money.
I don’t know how many photographs Flickr holds, but it already
run into many millions.21 For me, the most interesting aspect of
it is that users are encouraged to attach tags to their pictures,
and these tags can be used as the basis for searches of the
entire database. The other day I searched for photographs tagged
with ‘Ireland’ and came up with 122,000 images! (A month
earlier, the same search had come up with 85,000.) Of course I
didn’t sift through them all, but I must have looked at a few
hundred. They were mostly holiday and casual snapshots, but here
and there were some truly beautiful images. What struck me most,
though, was what they represented. Ten years ago, those
snapshots would have wound up in a shoebox and would certainly
never have been seen in a public forum. But now they can be –
and are being – published, shared with others, made available to
the world. And this is something new. And something important
for those of us who aspire to reach audiences with our messages.
~oOo~
What I’m really trying to say is that the world has changed
out of all recognition already. And if I’m right about the
20 “A Flickr of the digital camera switch and the folksonomy system is born”,
Observer, 27 November, 2005. Online at:
http://observer.guardian.co.uk/business/story/0,6903,1651448,00.html
21 In December 2004, Salon.com was reporting 2.2 million and growing at a rate
of 30,000 per day. See http://www.salon.com/tech/feature/2004/12/20/flickr/.
These estimates are now seriously out of date.
UK Marketing Society Keynote Address: 28 February, 2006
18
analogy with printing, this is just the beginning. We ain’t seen
nothin’ yet.
Now it would be impertinent of me to try to spell out what all
this might mean for you. You know your own business best. But
here’s a salutary tale and a closing thought.
The thought is that no industry can afford to ignore what’s
going on, even if it thinks that the Internet is nothing to do
with it.
If you want a case study of this, consider what happened to
the music industry.
In the early 1980s, recorded music went digital with the
arrival of the compact disk. Recording studios pumped out music
as streams of ones and zeroes; and at the consumer end, CD
players translated those ones and zeroes back into sounds. The
problem was: how to get those ones and zeroes – those digital
bitstreams – from studio to player. The solution was to burn the
bits onto plastic disks and distribute those to consumers. That
meant making the disks, burning the music onto them, printing
labels, packing them into boxes (which always seemed to break),
packing the boxes into bigger boxes, putting those on pallets,
loading the pallets onto trucks, delivering them to warehouses,
who then delivered them to retailers, who took the disks out of
the boxes and put the boxes on display and… I could go on, but
you will see what a wasteful, inefficient, brain-dead way that
was for distributing a product.
Nevertheless, the record industry built a very cosy business
out of this. There was one small problem: the economics of
producing and shipping disks meant that there was little
commercial mileage in selling single tracks, so the industry
focussed on selling albums and increasingly ignored the consumer
demand for tracks. And it might have continued doing this
forever, but for one thing: the Internet.
UK Marketing Society Keynote Address: 28 February, 2006
19
In 1999 a disaffected music lover called Shawn Fanning sat
down and wrote some software which enabled people easily to
locate and share music tracks over the Net. He called it
Napster. Within 18 months, Napster had 80 million subscribers,
swapping millions of tracks every hour of every day. The music
industry eventually got Napster shut down, but by then the genie
was out of the bottle. And even today, as I speak, millions of
music tracks are being illicitly shared across the Net (remember
that CacheLogic survey of Internet traffic), and the only hope
for the music industry is to fall in with the legal downloading
services offered by companies like Apple with its iTunes Store.
Since it opened the store, Apple has sold a million tracks a day,
and last week celebrated the sale of its billionth song.
One of the defensive arguments used by the record companies to
justify their existence – not to mention their stock options --
was that only they could find and nurture talent. Without them,
so they implied, the Rolling Stones and U2 would still be playing
in pubs, clubs and student raves. Well, I don’t know if you’ve
heard of a Sheffield band called the Arctic Monkeys, but I’m
willing to bet your kids have. They’ve suddenly become the
biggest band in Britain. And they did it by releasing their
music – free – on their website, and letting fans spread it by
word of mouth. Eventually a record label came begging to be
allowed to take them on. It is bands like Arctic Monkeys, not
record companies, that are the future of the music business.
Nobody is indispensable any more.
The moral of the story is that you ignore changes in the
communications ecology at your peril. Remember what Andy Grove
said all those years ago. Companies that are not Internet
companies won’t be companies at all.

Thanks to http://www.hinduonnet.com/thehindu/nic/keynote-hindu.pdf