This article appeared in Forbes ASAP (February 1994)
Extrapolating the familiar present to imagine a radically different future has never worked. What predictive power resided in phrases like "iron horse," "horseless carriage," "wireless telegraphy," or "picture radio?" Did they offer any hint of what life would be like once the innovation took hold? By their very nature technological revolutions sever society's links to its immediate past.
Today, phrases like "Information Superhighway" and "500 channel TV" blind us to the most potent and profitable aspects of the coming Information Age. Superhighways and television are pivotal to today's systems of mass production and mass communication, but they have nothing in common with the point-to-point, individual-to-individual marketplace that will sprout up around a dense webwork of fiber optics and computers.
Instead of extrapolating the present, we can get a better feel for what lies ahead by examining a similar shift that began in the 17th century. Then as now, the plummeting cost of disseminating information created new markets and utterly transformed society.
In London in 1649, a fellow named Henry Walker got his hands on an idle printing press and began printing up what we'd recognize as a weekly want-ad sheet. To promote his novel service, Walker ran his own ad to attract advertising from those who "have household stuffe to sell, also others that would lay jewels to pawn, gentleman that want servants and servants that want places. For any business it costs but fourpence and doth much good in bringing the buyer and seller together."
Every market depends on buyers and sellers being aware of each other. Before Walker and his competitors began printing these "classified ad" sheetsÑthe predecessors of modern newspapersÑbuyers and sellers had no easy way of finding each other. The likelihood of a mutually profitable exchange was limited by who happened to bring what to the village market on a given day. Sky high information costs choked off most potential trades before they began.
Advances in printing technology gradually drove costs down while raising page counts and the number of copies printed in each issue. In the early 1800s, Koening cylinder printing and the steam press brought printing speeds up to a thousand sheets per hour, far exceeding the 150 copy per hour rate of hand presses. Later, the railroads and 18,000 page per hour rotary presses combined to further broaden newspaper distribution. Markets for labor and goods became defined by a newspaper's circulation area instead of the boundaries of a village square.
Much like today's computer magazines, people bought newspapers primarily to study the ads. In America, the editorial content of newspapers remained secondary to the advertising right up until the Civil War, when harrowing battlefield reports shoved ads off the front page.
Illustrated magazines appeared around the turn of the century with advances in linotype typesetting and the invention of halftone technology. Almost all were overstuffed with ads by producers trying to reach a nationwide marketplace. The era of mass communication, paid for by mass advertising, had arrived.
As with newspapers and magazines, the success of radio hinged upon its value as an advertising medium. Not everyone saw it that way, of course. General Sarnoff, head of RCA, spoke out vigorously against the commercialization of radio. And in 1922, Secretary of Commerce Herbert Hoover, argued that it was "inconceivable . . . to allow so great a possibility for service . . . to be drowned in advertising chatter." Needless to say, the technologists and government officials lost out to market forces.
Virtually all the radio shows of the Twenties and Thirties were controlled by advertising sponsors. "Amos 'n' Andy," radio's most popular show, was created by Pepsodent's ad agency. To an extent that would embarrass even the producers of today's toy-pushing Saturday morning cartoons, radio shows existed solely to sell products. Sponsors had the final word on everything that went over the air. In 1933, when New York's Radio City was completed, every studio had a "sponsor's booth."
Magazine, radio, and then television advertising all wield enormous influence over mass audiences, but none of them can compete with newspapers in their original marketÑclassified ads. For centuries, newspapers have remained unchallenged in their ability to create local markets in jobs, goods and services by printing want-ads at modest rates. To this day, the classifieds represent a third of all newspaper revenues.
Despite TV's power, the fact is you can't browse through a TV broadcast. Because TV doesn't allow you to zero in on a piece of information when you're ready to look, it simply cannot create the kind of person-to-person marketplace that newspapers made possible centuries ago. But all that is about to change.
Dirt cheap distribution of text and video from any point on the net to any other means that a vast new marketplace will open up for smaller-scale, intermittent advertisers. Just as cheap printing presses allowed Henry Walker and his colleagues to create "virtual" bulletin board for London, the infoweb will allow a coming generation of network publishers to create a marketplace for the world.
Ironically, many of the techno-weenies who helped create the Internet fail to see that it's greatest social value will be in helping buyers and sellers find each other. Instead, echoing that great visionary Herbert Hoover, they rail against advertising, fearing crass commercialization of a technology too important to be used for making money.
More savvy observers like Christopher Locke, editor of Internet News, recognize that "as the Internet comes to depend more on business involvement and less on government largess, some form of business advantage is critical if companies are expected to put money into developing the medium." That doesn't mean, however, that mass advertising will find its way into on-line world. "When Prodigy tried putting advertising on-line," says Locke, "it brought howls of protest from users unwilling to share precious screen real estate with digitized billboards."
"The rules are completely different in the new environment," claims John Duhring of WAIS, Inc., an Internet information services provider. "We don't realize just how we've organized ourselves around the economics of print, radio, and TV." Until now, advertisers have had to squeeze value from tiny bits of space or airtime. Duhring contends, "Space and time limitations are meaningless on the Internet. Full technical information, not just grabby pictures and headlines, can be included in ads." In fact, in a world where more and more products are pure information, it'll be hard to tell where the advertising ends and the product begins.
Duhring's views are echoed by Tim O'Reilly, whose company offers another new information service called the Global Network Navigator. O'Reilly says that the unlike the "in your face" advertising common today, ads on the infoweb will help people retrieve the information they want, entirely under their own control. "We're working with advertisers to create resource centers consisting of useful information about their products. Readers can simply browse the marketplace, or they can use the search function to look for particular kinds of information."
The future sounds a lot more like a video version of your newspaper's classified pages than a 500 channel dose of prime-time. Instead of intrusive, often obnoxious, mass advertising, we'll see an endless on-line video want-ad system. Ads purchased by everyone from geotechnical consultants and sellers of aircraft parts to buyers of Ming Dynasty artifacts will be on display for those who want to survey the market.
Despite what you hear today, life on the infoweb won't be like driving along an "Information Superhighway" or sitting stupefied before "500 channel TV." The future beckons with a vast electronic bulletin board. The advertising it carries will do for individuals and small businesses across America what the first newspapers did for buyers and sellers scattered across London. It will create a market that brings them together and makes them rich.