In my last post I introduced a new mini-project, an attempt to gaze into the Internet and to see what it looks like. A cursory glance at web traffic rankings suggests that there are three primary uses of the internet: information, networking, and commerce (or, as I called it in the first post, shopping). My next few posts will address each of those areas, starting with the last of the three: commerce.
Beneath the surface of the Internet is money. Each and every server - and therefore, each and every website, email account, or bit of streaming media - exists somewhere in the real world, if only as little bits of electrical charge on a hard drive somewhere, demanding day-to-day energy usage, maintenance by IT professionals, and the occasional replacement. That the Internet feels "free" because the user experience is so abstracted from the silicon heart of the beast, but in reality it is anything but.
I don't just mean that the user pays his ISP a monthly connection bill. I mean the very fabric of the web is financial, that sites like Google or Facebook are able to operate not because they are popular, but because they are profitable. In the case of those two sites, extreme popularity and profit go hand in hand, of course, because they make so little from any given user that the user barely notices. There are sites, however, with much smaller user bases that are just as profitable because of the nature of their work.
Amazon and eBay are, of course, the two biggest online marketplaces because they understand the capabilities of the Internet better than sites created by traditional stores that had a real presence before the web. Amazon and eBay both thrive by allowing people to connect directly with each other, cutting the middle-man (the bookstore, for example) out of the buying and selling of used merchandise. Where Barnes and Noble is just a bookstore online, Amazon is a whole different kind of beast, a commercial enterprise that simplifies and democratizes commerce. Where Amazon started as a bookseller, primarily, they have been able to branch into just about every area of consumer purchases because they were built not on books (like Barnes and Noble), but rather on a retail process.
Make no mistake, however, about Amazon's motives. As great a company as Amazon is, it is still profit-driven. Stocking, shipping, and selling merchandise from their own warehouses is obviously a priority, given that they put their own results at the top of search results, and encourage consumers to register for Amazon credit cards, use "Super Saver" shipping, and so on.
Moreover, Amazon shares with eBay its primary means of making a profit: taking a small chunk out of every sale that occurs on the site. Given the sheer volume of commerce occurring on these two sites, it's easy to see that the small (around 10%) cuts that the sites take adds up fast.
Even Craigslist - which does not charge a commission - remains financially solvent thanks to a simple business model. According to Forbes.com, Craigslist survives by charging companies ($25, a pittance) to post job listings in the six largest US markets, plus a tiny $10 fee for New York apartment listings. That alone more than covers the cost of operating the site for free in every other category it works in, and in every other city.
The lesson from Craigslist - or even from Amazon and eBay - is that there are a lot of people on the Internet, and it doesn't take much to run the machine. But the machine must run, nonetheless. Google, despite its fundamental role as an information search site, is also a business that absolutely rakes in cash pennies at a time. When you click on that Amazon link from Google, you are greasing the wheels of the corporate Internet machine, because a small part of your Amazon purchase goes to Google, also.
It is hardly surprising that the Internet is commercial, but it's easy to forget. Rare as it is to see people working for free in the real world, it is even more rare to see it online. Indeed, the Internet is, in the end, a kind of abstracted, simplified version of real human interaction, with advertising at the heart of it all. But advertising alone cannot drive any economy unless actual purchases follow, and on the Internet they certainly do. What's more, since increasingly the things we purchase are digital to begin with, profit margins can be much, much higher in the web space. The traditional economic notion that purchase cost is derived, at least in part, from production cost is essentially meaningless online, where a game developer (for example) or a book for the Kindle need only be produced once, and distributed according to what people will pay for it, and not what it is "worth."
Perhaps what a thing is worth is what people will pay for it. That's a bigger economic and philosophical question. Regardless, as sales of digital media increase, the profit margin for each sale approaches something close to 100% (minus the negligible, compared to traditional commerce, increased costs of managing more sales). Scale - often a bugbear in traditional business - is the whole point of online business. The more people buy a product or use a service, the better the company does unequivocally. Does that make the capitalistic competition of the web more robust, or less robust? Is the consumer better off in a digital economy? Are businesses? Are governments? Those are important questions that to my knowledge have not been adequately answered.
Needless to say, the point here is remember that money makes the Internet go round, even more so than the material world. To most people I'm guessing that is no surprise, but it might just give us pause as well move forward and try to understand what the Internet is and does. First and foremost, it's a business, and it does sales. What deeper value we are able to pull out of it may or may not be corrupted by this fact (I truly do not know), but at the least it bears remembering that behind each and every corner of the Internet is the wall of commerce.
Showing posts with label shopping. Show all posts
Showing posts with label shopping. Show all posts
Monday, May 2, 2011
Saturday, April 30, 2011
What It Is, What It Isn't, What It Does, What It Doesn't: Interrogating the Internet, Part One
What, really, is the Internet all about?
That's probably not a great question, since, hey, we all use the Internet all the time for all kinds of things. Part of the point is that it's not really about anything, it's just there. The digital world is a part of our lives in much the way that eating, or, if it's not quite at that level, making insurance payments is.
Looking at the most visited - according this list to Quantcast.com - there are a few focal points of our web-lives. There are three primary categories that jump out to me:
1) Information
2) Networking
3) Shopping
If human experience is richer than these three things, it's not reflected in our Internet usage. Almost every top-50 website fits into one or more of these three categories.* I could go through the entire list, but I think each of those categories has a site or two that capture the essence. You can probably guess what those sites are, but I'll go ahead and tell you anyway.
* The exceptions are interesting (all rankings at time of writing, by the way). A part of me thinks that microsoft.com at 11 and adobe.com at 22 are none-of-the-above, though information kind of works. Microsoft's presence on the list owes to Windows, of course, and Adobe's to Flash. GoDaddy.com checks in at 31, despite being a kind of meta-website. In some sense it fits under networking, in some sense shopping, but really it's just a web-hosting site. It's place this high - way above any other hosting service, owes to their aggressive Danica Patrick advertising campaign. Monster.com is kind of reverse shopping, at 34. Pandora rates 36th, the first website explicitly designed around artistic purposes, even if it also has a financial goal as well. There are a few others further down, but you get the idea.
The top information site (and top overall site) is, of course, Google. Quantcast estimates approximately 150 million users per day. Google, however, as a search engine, is not an information provider so much as, well, a search engine. The other end of the information spectrum is the 7th most visited site on the Internet, Wikipedia. At over 70 million daily users, Wikipedia may be outstripped by other search sites like MSN and Yahoo, but is the most visited pure information site on the web.
The top networking sites, of course, are Facebook and Twitter. Youtube has an argument, as well, but it straddles the line between information and networking a bit too much for it to really count as either, to my mind. Moreover, Youtube is less a networking or informational destination than a hosting service for videos hosted or linked to from Twitter and Facebook or found on Google. That it is a part of Google only goes to show. Anyway, Facebook attracts about 140 million users a day, Twitter nearly 100 million.
Shopping is the least robust of these three categories, with Amazon's 70 million users and eBay's 60 million falling well short of Facebook, even when combined.
Now none of that is likely to be news to you, but I wanted to get the numbers on the table as a kind of primer for the picture I want to paint. I've been trying to grapple with the questions in the lamentably verbose title of this post, lately. What, really, is the Internet? What does it do? Is there, maybe, a way that we're using - or, more to the point, failing to use - it that might be particularly good. And I don't mean good, as in useful, I mean good, as in good. For all the talk about the meritocracy of the web, about the role of Twitter in revolutions, about the educational opportunities afforded by technology, I can't help but wonder whether there's an untapped potential, a chance to do more than make the things we do easier, a chance to actually make the world better?
There's an argument to be made - and a good one, I think - that it has done exactly that, and not just because is it difficult to separate "easier" from "better." Even so, there's something missing, something essential to real human progress. You see, despite the presence of the Internet, there's still so much social injustice, so much corruption and greed, so many profound and profoundly dangerous flaws in human society. It is not, of course, possible for technology to address the bits of human nature that make us cruel, ignorant, or both, but that doesn't mean that we people who believe in trying to create a better world ought not to use whatever tools are at our disposal.
With that in mind, I want to talk about these categories of our digital lives, in my next few posts. What do each of them represent in us, why are they so important, and what potential is there for something better. I am leery of this project exactly because it requires me to take a moral stand, to say that certain actions or ways of thinking might be morally superior to others. That's always a slippery slope, because it can be hard to separate real, fundamental morality from cultural and societal norms. Nevertheless, without any moral compass, without a vision for a better world in which "better" actually has meaning, what's really the point of anything at all?
In any case, I don't presume to have answers, here, but part of my sense of "good" is that it has more to do with the way in which we do things than what we do. That is, I may not know what the right thing to do is, but if I act out of compassion, empathy, and a desire both for the joy of myself and others, it doesn't really matter whether I do the "right" thing by some social, cultural, or religious standard. What matters to me is the intentionality, not the action (really, this is just a repackaging of my preference for process over outcome).
Before we launch into actually looking at the biggest, best, most popular, most successful sites on the Internet, then, as we try to understand what it is that they are and aren't, and what it is that they do and don't do, I want to bring up two points as a wrap to this introduction. First, I've chosen "networking" over "communication" for a reason that I'll discuss more when I write on those sites. Suffice to say, I'm not convinced that communication actually does happen on the Internet. Or, if it does, it does so in spite of, and not because of, the web-based services that currently exist.
Secondly, I want to make a point about intentionality on the part of designers of extremely successful websites. There is no question that the entrepreneurs that founded Facebook and Google had good intentions. There is also no question that they were a part of a system where the purpose of any product is not the betterment of mankind, but profit. Were they motivated by money? Are they now? Does it even matter? Those are questions I won't try to answer now, but I do want to share a true parable, that may not totally make sense now, but hopefully will be helpful in my next few posts.
Back when I was a music assistant at St. John's, we would make the students in the class write a Gregorian chant. That sounds more complicated than it is, because what it really means is "write a melody." So students wrote melodies. The problem is, students wrote melodies that didn't follow the rules of chant. Rather, their melodies followed the rules of tonal harmony. They would begin with a tonic, they would move to a subdominant, they would reach a tension point on a dominant, and they would return to the tonic. Of course, the melodies didn't really do this, because they were melodies, but were you to write a harmony to those students' melodies, it would, almost always, be a I-IV-V-I chord progression.
What is interesting is not that this happens - after all, each and every one of us has heard thousands of I-IV-V-I progressions in our lives - but that it happened most with the people who didn't know the language of tonal harmony. Completely non-musical (even tone-deaf) students would write perfectly prim and proper tonal harmonic melodies. It was stunning.
The analogy, then, I'll phrase as a question. What happens when young entrepreneurial people who don't know the language of business, but are trying to create a service based upon the perceived needs of people (and not their own desire for fame or profit, at least not first and foremost) actually go and build those services? What, actually, ends up being the purpose of those projects?
That's probably not a great question, since, hey, we all use the Internet all the time for all kinds of things. Part of the point is that it's not really about anything, it's just there. The digital world is a part of our lives in much the way that eating, or, if it's not quite at that level, making insurance payments is.
Looking at the most visited - according this list to Quantcast.com - there are a few focal points of our web-lives. There are three primary categories that jump out to me:
1) Information
2) Networking
3) Shopping
If human experience is richer than these three things, it's not reflected in our Internet usage. Almost every top-50 website fits into one or more of these three categories.* I could go through the entire list, but I think each of those categories has a site or two that capture the essence. You can probably guess what those sites are, but I'll go ahead and tell you anyway.
* The exceptions are interesting (all rankings at time of writing, by the way). A part of me thinks that microsoft.com at 11 and adobe.com at 22 are none-of-the-above, though information kind of works. Microsoft's presence on the list owes to Windows, of course, and Adobe's to Flash. GoDaddy.com checks in at 31, despite being a kind of meta-website. In some sense it fits under networking, in some sense shopping, but really it's just a web-hosting site. It's place this high - way above any other hosting service, owes to their aggressive Danica Patrick advertising campaign. Monster.com is kind of reverse shopping, at 34. Pandora rates 36th, the first website explicitly designed around artistic purposes, even if it also has a financial goal as well. There are a few others further down, but you get the idea.
The top information site (and top overall site) is, of course, Google. Quantcast estimates approximately 150 million users per day. Google, however, as a search engine, is not an information provider so much as, well, a search engine. The other end of the information spectrum is the 7th most visited site on the Internet, Wikipedia. At over 70 million daily users, Wikipedia may be outstripped by other search sites like MSN and Yahoo, but is the most visited pure information site on the web.
The top networking sites, of course, are Facebook and Twitter. Youtube has an argument, as well, but it straddles the line between information and networking a bit too much for it to really count as either, to my mind. Moreover, Youtube is less a networking or informational destination than a hosting service for videos hosted or linked to from Twitter and Facebook or found on Google. That it is a part of Google only goes to show. Anyway, Facebook attracts about 140 million users a day, Twitter nearly 100 million.
Shopping is the least robust of these three categories, with Amazon's 70 million users and eBay's 60 million falling well short of Facebook, even when combined.
Now none of that is likely to be news to you, but I wanted to get the numbers on the table as a kind of primer for the picture I want to paint. I've been trying to grapple with the questions in the lamentably verbose title of this post, lately. What, really, is the Internet? What does it do? Is there, maybe, a way that we're using - or, more to the point, failing to use - it that might be particularly good. And I don't mean good, as in useful, I mean good, as in good. For all the talk about the meritocracy of the web, about the role of Twitter in revolutions, about the educational opportunities afforded by technology, I can't help but wonder whether there's an untapped potential, a chance to do more than make the things we do easier, a chance to actually make the world better?
There's an argument to be made - and a good one, I think - that it has done exactly that, and not just because is it difficult to separate "easier" from "better." Even so, there's something missing, something essential to real human progress. You see, despite the presence of the Internet, there's still so much social injustice, so much corruption and greed, so many profound and profoundly dangerous flaws in human society. It is not, of course, possible for technology to address the bits of human nature that make us cruel, ignorant, or both, but that doesn't mean that we people who believe in trying to create a better world ought not to use whatever tools are at our disposal.
With that in mind, I want to talk about these categories of our digital lives, in my next few posts. What do each of them represent in us, why are they so important, and what potential is there for something better. I am leery of this project exactly because it requires me to take a moral stand, to say that certain actions or ways of thinking might be morally superior to others. That's always a slippery slope, because it can be hard to separate real, fundamental morality from cultural and societal norms. Nevertheless, without any moral compass, without a vision for a better world in which "better" actually has meaning, what's really the point of anything at all?
In any case, I don't presume to have answers, here, but part of my sense of "good" is that it has more to do with the way in which we do things than what we do. That is, I may not know what the right thing to do is, but if I act out of compassion, empathy, and a desire both for the joy of myself and others, it doesn't really matter whether I do the "right" thing by some social, cultural, or religious standard. What matters to me is the intentionality, not the action (really, this is just a repackaging of my preference for process over outcome).
Before we launch into actually looking at the biggest, best, most popular, most successful sites on the Internet, then, as we try to understand what it is that they are and aren't, and what it is that they do and don't do, I want to bring up two points as a wrap to this introduction. First, I've chosen "networking" over "communication" for a reason that I'll discuss more when I write on those sites. Suffice to say, I'm not convinced that communication actually does happen on the Internet. Or, if it does, it does so in spite of, and not because of, the web-based services that currently exist.
Secondly, I want to make a point about intentionality on the part of designers of extremely successful websites. There is no question that the entrepreneurs that founded Facebook and Google had good intentions. There is also no question that they were a part of a system where the purpose of any product is not the betterment of mankind, but profit. Were they motivated by money? Are they now? Does it even matter? Those are questions I won't try to answer now, but I do want to share a true parable, that may not totally make sense now, but hopefully will be helpful in my next few posts.
Back when I was a music assistant at St. John's, we would make the students in the class write a Gregorian chant. That sounds more complicated than it is, because what it really means is "write a melody." So students wrote melodies. The problem is, students wrote melodies that didn't follow the rules of chant. Rather, their melodies followed the rules of tonal harmony. They would begin with a tonic, they would move to a subdominant, they would reach a tension point on a dominant, and they would return to the tonic. Of course, the melodies didn't really do this, because they were melodies, but were you to write a harmony to those students' melodies, it would, almost always, be a I-IV-V-I chord progression.
What is interesting is not that this happens - after all, each and every one of us has heard thousands of I-IV-V-I progressions in our lives - but that it happened most with the people who didn't know the language of tonal harmony. Completely non-musical (even tone-deaf) students would write perfectly prim and proper tonal harmonic melodies. It was stunning.
The analogy, then, I'll phrase as a question. What happens when young entrepreneurial people who don't know the language of business, but are trying to create a service based upon the perceived needs of people (and not their own desire for fame or profit, at least not first and foremost) actually go and build those services? What, actually, ends up being the purpose of those projects?
Subscribe to:
Posts (Atom)
Posts
