Before I started to write this article I heard two pieces of news.
First, that the economy of Latvia had failed as part of the ongoing
depression. Second, that the American Government was going to provide
subsidies to hedge funds (!) to promote a revival of the financial
services industry. The mind boggles, to very different degrees at both
of these stories. Like this whole depression, it seems clear that the
core issue is that economies based on inauthentic exchange of
value are prone to
failure: the act of moving money from hither to thither doesn’t create
value, even though paper values rise. That’s a bubble.
There are a lot of these, of course, the bubble under my lens today is
the advertising bubble.
It seems to me that advertising, is really minimally effective, or
accidentally effective at any rate. Our world is submerged in
advertising, and yet we spend a great deal of time ignoring it: we use
DVRs to skip commercials, we install ad-blocking plug-ins on our
web-browsers, we instinctively tune out advertisements and have grown so
acclimated to the presence of advertising that we ignore ads. If
advertising is effective it is only effective incidentally.
And yet, we’ve built (albeit faltering) economies around advertising.
The first dot-com burst was due largely to the fact that advertising
revenue couldn’t support dot-com business model. The Web-2.0 bubble
hasn’t been entirely advertising driven, but that’s a huge part of the
equation (eg. google), and particularly for content (rather than
service) driven websites.
The thing is that advertising seems like a great way to support the
content industry (such as it is): we have practices to separate it from
editorial content, it provides a revenue stream, it’s easily integrated
into our designs, we know how to buy and sell it. But because it
doesn’t really work (at anything beyond generally raising the profile
of a logo, possibly), and advertising money dries up when the economy
dries up: so it’s not exactly a robust business model.
The problem, is that there’s not a lot of good models for content-based
services to operate under. Subscriptions don’t often work because the
threshold to commitment is high, and unless you already have an
audience, it’s hard to convince people to pay subscription fees.
Micropayments, and tip jars where you expect a lot of people to give a
very little in support of your site, often suffer from the same problems
as subscription models in practice.
The solution?
Well there isn’t one, exactly, so I’m really excited to see what
happens in the next couple of years. My gut instinct is that the
following two factors are important:
1. Content on the Internet should be a hook into some other revenue
generating scheme. Consult, coach, be an academic, publish books, sell
relevant stuff, and so forth. This works, it can certainly be overdone,
or done poorly, but blogging is a great way to prove to the world (and
yourself) that you know what you’re talking about, and that you’re an
interesting, creative, and committed thinker and worker, worthy of their
investment in other contexts.
2. There should be less content on the Internet. Part of the problem is
that since everyone can have their own website, in most cases
everyone does, and while this is great for the democracy of the web,
it means that there’s way more competition (for eyeballs, for
advertising money) than there needs to be. The end result is that
audience is way too divided. The solution: group blogs and more curated
content. It’s still possible for people to present individual streams
of content, and use personal sites for profiles, but in the age of the
niche and the post-advertising age, working in groups is the way. I’m
convinced.
More thoughts on this, particularly the second point to follow, of
course.
Onward and Outward!