Online content is exploding and traditional media and other start-ups still haven’t found a successful self-sustaining business model. There are cycles of motivation for content production, originally it was for communication but following the industrial revolution and the need to sell surplus production, advertising as an industry was born.
It has been claimed that Popeye was brought to life to relieve a persistent spinach surplus and to support the spinach farmers during the late 1920’s. Here a self-fueling media production was able to carry a message and grow. The same was true with soap operas and a growing proportion of content is coming from the product providers directly.
New York venture capitalist Fred Wilson comments that recent boardroom themes are focused on “driving repeat usage and retention” referring to sites which are trying to move from traffic conduits to sticky destinations. There’s a real battle for attention being fought out.
This does however beg us to ask if this useful to anyone. From recent valuations of some high-profile start-ups from California to China, everyone wants a piece of social. From angel capital to venture capital it’s all being pumped into anything with a link to web social. The other key factors of production are being diverted this way too in man hours and productivity. It’s impossible to know if these resources would have been better in another scientific field but then maybe they’re just assembling the building blocks of a yet unimaginable innovation. After all, who’d have first imagined that silicon would have led to this?
The Economist also asks if we’re living in a bubble. This is at least some recognition that fear is growing, but the other vital ingredient for bubbles is exuberance and this seems only to be increasing. The current crop of tech top-dogs are now well established with functioning business models, cash flow and even profit, unlike their counterparts of the dot com generation. Perhaps the reason for this difference is the cost of starting-up. In the 90’s the cost of existing on the web has dropped from millions to a few thousand dollars now. No start-up now would host their own servers and soon we may all well be living in the cloud anyway. Now the downside to having-a-go may not be leveraged bankruptcy. There is a real democratization and real freedom for anyone to achieve. However the other major difference between then and now is the predominant underlying revenue generating model. The Dot Com boom was filled with companies like WebVan and Boo who were trying to bring real world products to the web. They were attempting e-commerce businesses. The big survivors of this era are companies like eBay and Amazon which understood The Long Tail markets the web would allow; i.e. giving massive reach without the associated costs of inventory.
Now linking this to the daily skirmishes in the boardroom that Fred Wilson discussed, we understand why repeat usage and retention are such important reportable metrics to the tech companies of today. This time around, the businesses are almost entirely dependent on advertising for revenue.
There is no doubt that the market leaders have changed the world and for the better too. As Google and Facebook carry the torch we all follow, it is important to recognize the danger of losing the focus of why users come to you. Boardroom meetings should predominantly be spent focused on what is genuinely useful and that makes things better for users. That’s the job.