October 28th, 2009
40 years ago the Internet was born - now it devalues everything it touches
There are millions of people being disrupted out of their jobs thanks to the Internet. Is it a good thing? I think so…
Let’s take a look at its beginnings:
The first command typed in was “lo” which crashed the entire Internet - all two machines. Internet Reaches 40th Birthday Milestone
Undergraduate Charley Kline was given the simple job of logging on remotely from UCLA to the SRI machine; his one command was “login”.
The first attempt, however, proved too much for the “interface message processor” or IMP for short - the system crashed as young Charley reached the letter “g”.… 12 years on, only 213 computers being linked up to the network.
The Guardian is collecting stories for its “A people’s history of the internet.“
To mark the 40th anniversary of the first stirrings of the internet we asked you to tell us your experiences of life online. Hundreds of you responded, and here we present an interactive documentary of your stories and videos, alongside our own research and interviews with key figures (About this project)
Without doubt, the Internet is the most significant collection of technologies ever created. It enables huge numbers of new types of businesses and services, many of them replacing pre-Internet businesses.
Anything, any service, business, that can be digitized is now open to disruption because of the Internet. The Internet devalues everything it touches.
I define “devalues” in a monetary sense, dollars and cents because clearly it creates tremendous amounts of value. But that value often cannot be quantified or measured, or recovered, in a financial sense. For example, look at the transition to online journalism — it creates tremendous amounts of value because huge numbers of people read online journalism but we don’t have (yet?) a good way to recover the value of that work in dollars. And journalism is not the only sector being disrupted in this way because of the Internet.
The challenge for Internet based companies is to figure out how they can transform the value that they create into dollars and cents.
The challenge is that competitors can continually undercut each other because the costs of providing Internet based services is relatively inexpensive and it is difficult to lock up customers. Switching costs are very low for customers.
It helps if you are government regulated. The Telcos, for example are able to make use of VOIP and other advances in communications technologies to reduce their costs of doing business yet they are still able to raise the price of their services. Being a government regulated industry helps them keep competition away.
But if you are in the music industry, movie industry, journalism, software services, cloud computing, if you are a software engineer, if you are a web designer, if you design logos, if you do any kind of digital work you are exposed to a huge amount of competition, you are exposed to the lowest cost provider in your sector — thanks to the Internet.
It’s interesting that countries spend billions of dollars to protect their living standards by limiting immigration because they know that low-cost labor hurts the living standards of their citizens. Yet there are no controls on exporting jobs via the Internet.
That will change or at least there will be efforts made to change this and other aspects of Internet use, because of the disruptive effects that it enables. It’s not a good thing but some governments will try to do this.
I believe the Internet will eventually enable a new golden age but getting there will be messy.
These are interesting times. Happy birthday Internet.
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Please see: The Internet devalues everything it touches . . .
Tom Foremski reports on the business and culture of Silicon Valley at the intersection of technology and media. He also writes at Silicon Valley Watcher. See his full profile and disclosure of his industry affiliations.
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| 10/30/09
