WebTV was way ahead of its time and exactly backwards. The idea was to put the Web on TV. In the prevailing media framework of the time, this made complete sense. TV had been around since the Forties, and nearly everybody devoted many hours of their daily lives to it. The Web was brand new then. And, since the Web used a tube like TV did, it only made sense to make the Web work on TV, rather than vice versa.
Microsoft bought WebTV for $.425 billion in April 1997. It was the most Microsoft had ever spent on an acquisition, and a stunning sum to spend on what was clearly a speculative play. But Microsoft clearly thought it was skating to where the puck was going.
Not long after that I heard from Dave Feinleib, an executive at Microsoft. Dave wanted to know if I would be interested in writing a chapter for a book he was putting together on the convergence of the Web and television. What brought him to my door was that I was the only writer he found who claimed the Web would eat TV, rather than vice versa. Everybody else was saying that history was going the other way — including Microsoft itself, with its enormous bet.
Dave was an outstanding editor, and did a great job pulling his book together. Originally he wanted it to be published by somebody other than Microsoft, but that didn’t work out. If I’m not mistaken (and Dave, if you’re out there somewhere, correct me), his choices of title also didn’t make it. The title finally chosen was a kiss of death: The Inside Story of Interactive TV and (in much larger type) WebTV for Windows. (Cool: You can still get it at Amazon, so death in this case is only slightly exaggerated.)
It was a good book, and an important historic document. At least for me. Much of what I later contributed to The Cluetrain Manifesto I prototyped in my chapter of Dave’s book. My title was “The Message Is Not the Medium.”
Amazingly, I just found a draft of the chapter, which I assumed had been long gone in an old disk crash or something. Begging the indulgence of Dave and Microsoft, I’ll quote from it wholesale. Remember that this was written in 1998, at the very height of the dot-com bubble.
About the conversational nature of markets:
So what we have here are two metaphors for a marketplace: 1) a battlefield; and 2) a conversation. Which is the better metaphor for the Web market? One is zero-sum and the other is positive-sum. One is physical and the other is virtual. One uses OR logic, and the other uses AND logic.
It’s no contest. The conversation metaphor describes a world exploding with positive new sums. The battlefield metaphor insults that world by denying those sums. It works fine when we’re talking about battles for shelf space in grocery stores; but when we’re talking about the Web, battlefield metaphors ignore the most important developments.
There are two other advantages to the conversation metaphor. First, it works as a synonym. Substitute the word “conversation” for “market” and this fact becomes clear. The bookselling conversation and the bookselling market are the same. Second, conversations are the fundamental connections human beings make with each other. We may love or hate one another, but unless we’re in conversation, not much happens between us. Societies grow around conversations. That includes the business societies we call markets…
About the Web as a marketplace:
Today the Web remains an extraordinarily useful way to publish, archive, research and connect all kinds of information. No medium better serves curious or inventive minds.
While commerce may not have been the first priority of the Web’s prime movers, their medium has quickly proven to be the most commercial medium ever created. It invites every business in the Yellow Pages either to sell on the Web or to support their existing business by using the Web to publish useful information and invite dialog with customers and other involved parties. In fact, by serving as both an ultimate yellow page directory and an endless spread of real estate for stores and businesses, the Web demonstrates extreme synergy between the publishing and retailing metaphors, along with their underlying conceptual systems.
So, in simple terms, the Web efficiently serves two fundamental human needs:
1. The need to know; and
2. The need to buy.
While it also serves as a fine way to ship messages to eyeballs, we should pause to observe that the message market is a conversation that takes place entirely on the supply side of TV’s shipping system. In the advertising market, media sell space or time to companies that advertise. Not to consumers. The consumers get messages for free, whether they want them or not.
What happens when consumers can speak back — not just to the media, but to the companies who pay for the media? In the past we never faced that question. Now we do. And the Web will answer with a new division of labor between advertising and the rest of commerce. That division will further expose the limits of both the advertising and entertainment metaphors.
On Sales vs. Advertsing, and how the Web does more for the former than the latter:
“Advertising is what you do when you can’t go see somebody. That’s all it is.” — Fairfax Cone
Fairfax “Fax” Cone founded one of the world’s top advertising agencies, Foote, Cone & Belding, and ran it for forty years. A no-nonsense guy from Chicago, Cone knew exactly what advertising was and wasn’t about. With this simple definition — what you do when you can’t go see somebody — he drew a clear line between advertising and sales. Today, thirty years after he retired, we can draw the same line between TV and the Web, and divide the labors accordingly.
On one side we have television, the best medium ever created for advertising. On the other side we have the Web, the best medium ever created for sales.
The Web, like the telephone, is a much better tool for sales than for promotion. It’s what you do when you can go see somebody: a way to inform customers and for them to inform you. The range of benefits is incalculable. You can learn from each other, confer in groups, have visually informed phone conversations, or sell directly with no sales people at all.
In other words, you can do business. All kinds of business. As with the phone, it’s hard to imagine any business you can’t do, or can’t help do, with the Web.
So we have a choice. See or be seen: see with the Web, or be seen on TV. Talk with people or talk at them. Converse with them, or send them messages.
Once we divide these labors, advertising on the Web will make no more sense than advertising on the phone does today. It will be just as unwelcome, just as intrusive, just as rude and just as useless.
The Web will call forth — from both vendors and customers — a new kind of marketing: one that seeks to enlarge the conversations we call business, not to assault potential customers with messages they don’t want. This will expose Web advertising — and most other advertising — as the spam it is, and invite the development of something that serves supply without insulting demand, and establishes market conversations equally needed by both.
This new marketing conversation will embrace what Rob McDaniel calls a “divine awful truth” — a truth whose veracity is exceeded only by its deniability. When that truth becomes clear, we will recognize most advertising as an ugly art form that only dumb funding can justify, and damn it for the sin of unwelcome supply in the absence of demand.
That truth is this: There is no demand for messages. And there never was.
In fact, most advertising has negative demand, especially on TV. It actually subtracts value. To get an idea just how negative TV advertising is, imagine what would happen if the mute buttons on remote controls delivered we-don’t-want-to-hear-this messages back to advertisers. When that feedback finally gets through, the $180+ billion/year advertising market will fall like a bad soufflé.
It will fall because the Web will bring two developments advertising has never seen before, and has always feared: 1) direct feedback; and 2) accountability. These will expose another divine awful truth: most advertising doesn’t work.
In the safety of absent alternatives, advertising people have always admitted as much. There’s an old expression in the business that goes, “I know half my advertising is wasted. I just don’t know which half.” (And let’s face it, “half” is exceedingly generous.)
With the Web, you can know. Add the Web to TV, and you can measure waste on the tube too.
Use the Web wisely, and you don’t have to settle for any waste at all.
About advertising’s fatal flaw:
Television is two businesses: 1) an entertainment delivery service; and 2) an advertising delivery service. They involve two very different conversations. The first is huge and includes everybody. The second is narrow and only includes advertisers and broadcasters.
TV’s entertainment producers are program sources such as production companies, network entertainment divisions, and the programming sides of TV stations. These are also the vendors of the programs they produce. Their customers and distributors are the networks and TV stations, who give away the product for free to their consumers, the viewers.
In TV’s advertising business, the advertising is produced by the advertisers themselves, or by their agencies. But in this market conversation, advertisers paly the customer role. They buy time from the networks and the stations, which serve as both vendors and distributors. Again, viewers consume the product for free.
In the past, the difference between these conversations didn’t matter much, because consumers were not part of TV’s money-for-goods market conversation. Instead, consumers were part of the conversation around the product TV gives away: programming.
In the economics of television, however, programming is just bait. It’s very attractive bait, of course; but it’s on the cost side of the balance sheet, not the revenue side. TV’s $45+ billion revenues come from advertising, not programming. And the sources of programming make most of their money from their customers: networks, syndicators and stations. Not from viewers.
Broadcasters, however, are accustomed to believing that their audience is deeply involved in their business, and often speak of demographics (e.g. men 25-54) as “markets.” But there is no market conversation here, because the relationship — such as it is — is restricted to terms set by what the supply side requires, which are ratings numbers and impersonal information such as demographic breakouts and lifestyle characterizations. This may be useful information, but it lacks the authenticity of real market demand, expressed in hard cash. In fact, very few viewers are engaged in conversations with the stations and networks they watch. It’s a one-way, one-to-many distribution system. TV’s consumers are important only in aggregate, not as individuals. They are many, not one. And, as Reese Jones told us earlier, there is no such thing as a many-to-one conversation. At best there is only a perception of one. Big difference.
So, without a cash voice, audience members can only consume. Their role is to take the bait. If the advertisements work, of course, they’ll take the hook as well. But the advertising business is still a conversation that does not include its consumers..
So we get supply without demand, which isn’t a bad definition of advertising.
Now let’s look at the Web.
Here, the customer and consumer are the same. He or she can buy the advertisers’ goods directly from the advertiser, and enjoy two-way one-to-one market conversations that don’t involve the intervention either of TV as a medium or of one-way messages intended as bait. He or she can also buy entertainment directly from program sources, which in this relationship vend as well as produce. The distribution role of TV stations and networks is unnecessary, or at least peripheral. In other words, the Web disintermediates TV, plus other media.
So the real threat to TV isn’t just that the Web makes advertising accountable. It’s that it makes business more efficient. In fact the Web serves as both a medium for business and as a necessary accessory to it, much like the telephone. No medium since the telephone does a better job of getting vendors and customers together, and of fostering the word-of-mouth that even advertisers admit is the best advertising.
The Web is an unprecedented clue-exchange system. And when companies get enough clues about how poorly their advertising actually works, they’ll drop it like a bad transmission, or change it so much we can’t call it advertising any more.
We may have a blood bath. Killing ad budgets is a snap. Advertising is protected by no government agencies, and encouraged by no tax incentives. It’s just an expense, a line item, overhead. You can waste it with a phone call and almost nobody will get fired, aside from a few marketing communications (“marcom”) types and their expensive ad agencies.
About TV’s fatal flaw:
Few would argue that TV is a good thing. Hand-wringing over TV’s awfulness is a huge nonbusiness. TV Free America counts four thousand studies of TV’s effects on children. The TVFA also says 49% of Americans think they watch too much TV, and 73% of American parents think they should limit their kid’s TV watching.
And, as the tobacco industry will tell you, smoking is an “adult custom” and “a simple matter of personal choice.”
Then let’s admit it: TV is a drug. So why do we take it when we clearly know it’s bad for our brains?
Six reasons: 1) because it’s free; 2) because it’s everywhere; 3) because it’s narcotic; 4) because we enjoy it; 5) because it’s the one thing we can all talk about without getting too personal; and 6) because it’s been with us for half a century.
Television isn’t just part of our culture; it is our culture. As Howard Beale tells his audience, “You dress like the tube, you eat like the tube, you raise your children like the tube.” And we do business like the tube, too. It’s standard.
Howard Beale had it right: television is a tube. Let’s look at it one more time, from our point of view.
What we see is a one-way freight forwarding system, from producers to consumers. Networks and stations “put out,” “send out” and “deliver” programs through “channels” on “signals” that an “audience” of “viewers” “receive,” or “get” through this “tube.” We “consume” those products by “watching” them, often intending to “vege out” in the process.
Note that this activity is bovine at best, vegetative at worst and narcotic in any case. To put it mildly, there is no room in this metaphor for interactivity. And let’s face it, when most people watch TV, the only thing they want to interact with is the refrigerator.
Metaphorically speaking, it doesn’t matter that TV contains plenty of engaging and stimulating content, any more than it matters that life in many ways isn’t a journey. TV is a tube. It goes from them to us. We just sit here and consume it like fish in a tank, staring at glass.
Of course we’re not really like that. We’re conscious when we watch TV.
Well, of course we are. So are lots of people. But that’s not how the concept works, and its not what the system values. TV’s delivery-system metaphors reduce viewing to an effect — a noise at the end of the trough. And they reduce programming to container cargo. “Content,” for example, is a tubular noun that comes straight out of the TV conversation. What retailers would demean their goods with such a value-subtracting label? Does Macy’s sell “content?” With TV, the label is accurate. The product is value-free, since consumers don’t pay a damn thing for it.
There is a positive side to the entertainment conversation, of course. Writers, producers, directors and stars all put out “shows” to entertain an “audience.” Here the underlying metaphor is theater. By this conceptual metaphor, TV is a stage. But the negotiable market value of this conversation is provided entirely by its customers: the TV stations and networks. The audience, however, pays nothing for the product. Its customers use it as advertising bait. This isolates the show-biz conversation and its value. You might say that TV actually subtracts value from its own product, by giving it away.
And, the story of TV’s death foretold:
In the long run (which may not be very long), the Web conversation will win for the simple reason that it supports and nurtures direct conversations, and therefore grows business at a much faster rate. It also has conceptual metaphors that do a better job of supporting commerce.
Drugs have their uses. But it’s better to bet on the nurtured market than on the drugged one.
Trees don’t grow to the sky. TV’s $45 billion business may be the biggest redwood in the advertising forest, but in a few more years we’ll be counting its rings. “Propaganda ends where dialog begins,” Jacques Ellul says.
The Web is about dialog. The fact that it supports entertainment, and does a great job of it, does nothing to change that fact. What the Web brings to the entertainment business (and every business), for the first time, is dialog like nobody has ever seen before. Now everybody can get into the entertainment conversation. Or the conversations that comprise any other market you can name. Embracing that is the safest bet in the world. Betting on the old illusion machine, however popular it may be at the moment, is risky to say the least…
TV is just chewing gum for the eyes. — Fred Allen
This may look like a long shot, but I’m going to bet that the first fifty years of TV will be the only fifty years. We’ll look back on it the way we now look back on radio’s golden age. It was something communal and friendly that brought the family together. It was a way we could be silent together. Something of complete unimportance we could all talk about.
And, to be fair, TV has always had a very high quantity of Good Stuff. But it also had a much higher quantity of drugs. Fred Allen was being kind when he called it “chewing gum for the eyes.” It was much worse. It made us stupid. It started us on real drugs like cannabis and cocaine. It taught us that guns solve problems and that violence is ordinary. It disconnected us from our families and communities and plugged us into a system that treated us as a product to be fattened and led around blind, like cattle.
Convergence between the Web and TV is inevitable. But it will happen on the terms of the metaphors that make sense of it, such as publishing and retailing. There is plenty of room in these metaphors — especially retailing — for ordering and shipping entertainment freight. The Web is a perfect way to enable the direct-demand market for video goods that the television industry was never equipped to provide, because it could never embrace the concept. They were in the eyeballs-for-advertisers business. Their job was to give away entertainment, not to charge for it.
So what will we get? Gum on the computer screen, or choice on the tube?
It’ll be no contest, especially when the form starts funding itself.
Bet on Web/TV, not TV/Web.
Looking back on all that, I wince at how hyperbolic some of it was (like, there really is some demand for some messages), but I’m still pleased with what I got right, which is that the Web eats TV. Which brings me to the precipitating post, YouTube is Huge and About to Get Even Bigger, by Jennifer Van Grove in Mashable. Sez Jennifer,
According to YouTube, the hours of video uploaded to YouTube every minute has been growing astronomically since mid-2007, when it was just a measly six hours per minute. Then, in “January of this year, it became 15 hours of video uploaded every minute, the equivalent of Hollywood releasing over 86,000 new full-length movies into theaters each week.”
Now, just a few months later and we’ve hit the 20 hour per minute milestone, which means that for every second in time about 33 minutes of video make it to YouTube, and that for any given day 28,800 hours of video are uploaded in total…
Even though YouTube () is seeing such massive upload numbers, and we think that speaks to the strength of their community, they still have monetization challenges that are only exacerbated by the rising bandwidth costs required to support such an enormous load. Bandwidth costs are already proving to be the bane of YouTube’s existence, possibly resulting in $470 million in loses for this year alone.
So while YouTube’s outwardly celebrating that we’re dumping 20 hours of video on their servers every minute, we think they should count their blessings with a little more realism since, based on previous patterns, this number, along with bandwidth costs, will only continue to rise.
“Rise” is too weak a verb. What we have here is something of an artesian flood, a continent of blooming volcanoes.
In the old top-down world of broadcasting, all we had were a few thousand big transmitters, each with limited reach, stretched and widened by cable and satellite TV. (Remember that what we call “cable” began as CATV: Community Antenna TeleVision.) It is over these legacy systems, plus the upgraded phone system, that most of us are connected to the Internet today.
In the legacy TV world, transmitters are obsolete to the verge of pointlessness. So are “channels.” So are the “networks” that are now just distributors for TV shows. All that matters is “content,” as they say. And that’s moving online, huge-time.
Tomorrow’s shows won’t be coming only from big-time program producers. We’ll be getting them from each other as well. We already see that with YouTube, but in relatively low-def resolutions. Still, it’s a start. At the end of the next growth stage we’ll be producing out own damn shows, and at resolutions higher than cable can bear. So will the incumbent producers, of course, but they won’t be taking the lead in pushing for wider bandwidth. That’s an easy call because they’re not taking the lead right now, and they should be. Instead they’ve left it up to us: the “viewers” who are now becoming producers and reproducers.
Already you can get a camcorder that will shoot 1080p video for well under a $grand. That’s more resolution than you’ll get from cable or satellite, with a few pay-per-view exceptions. Combine the sphinctered nature of cable and satellite TV bandwidth with the carriers’ need to compete by carrying more and more channels, and what you get is stuff that’s “HD” in name only. While the resolution might be 720p or 1080i, the amount of actual data carried on each channel is minimal or worse, resulting in skies that look plaid and skin that looks damaged. All of whch means that the best thing you can see — today — on your new 1080p screen comes from your new 1080p camcorder. (Unless you pay bux deluxe for a Blu-Ray player, which not many of us are doing.) So: how long before ordinary folks are producing their own high-def movies, in large numbers? How long before that pounds out the walls of pipes all over the place?
Even if that takes awhile, we have to face facts. We’re going to need the bandwidth. Storage and processing we’ve got covered, because that’s at the edges, where there’s not much standing in the way of growth and enterprise. In the middle we’ve got a world wide bandwidth challenge.
The phone and cable companies can’t give it to us — at least not the way they’re currently set up. Even the best of the carrier breed — Verizon FiOS, which I’m using right now, and appreciating a great deal — is set up as a top-grade cable TV system that also delivers Internet. Not as a fat data pipe between any two points, which is what we’ll need.
Pause for a moment and recall this scene from the movie “Jaws”. “We’re gonna need a bigger boat,” Roy Scheider says.
TV on the Net is the shark in this story. The Quinn role is being played by the carriers right now. They need to be smarter than what we’ve seen so far. So do the rest of us.
Tags: Cluetrain, Dave Feinleib, microsoft, WebTV
Pingback from We’re gonna need a bigger boat | Blog.Wood on May 27, 2009 at 7:23 pm
I think it’s interesting that until fairly recently, a lot of science fiction depicted telecommunication of the future as interactive television as well… even in films up into the ’90s, you had videophones mashing together a TV, a phone, and a line, with little or no idea that the general purpose computers catching on in business would be able to do networked multimedia communication. To me that’s proof of how much of a surprise it was, that many futurists didn’t even consider it.
I’m looking at an email I sent to this “doc” guy back in 2007:
1) My house is where it is. Nothing will change that. Thus, whatever
I have to pay in terms of capital costs to get fiber to my house is
just another aspect of the capital costs of my house, like the number
of square feet, the type of siding, the number of acres, etc.
2) Businesses have trouble raising capital. There’s no magic wand;
every kind of capital has its cost, most of which is related to the
risk. This includes ISPs.
3) My local ISP would be happy to run fiber out to my house, if they
could get sufficient return on the capital expended to cover the cost
of the capital.
Here’s the solution:
4) Just as I have to have somewhere to live, I have to have Internet
access. It’s a necessity to me. Thus, I will spend my savings, or
borrow money, to buy a house and, I propose, a fiber run from my ISP’s
POP to my house.
5) I pay them their cost for running the fiber. Obviously this is
good for them, because they get their employees’ salary covered and it
increases the amount of fiber they buy which lowers the cost to them.
6) The agreement with them is structured such that they are borrowing
the money from me. My loan to them is secured by a lein on the
fiber. If they go under, I own the fiber, and can use it to gain
access from somebody else.
7) The agreement also specifies that they pay more than a risk-free
interest rate (this is the same rate that the US pays to borrow
money), but less than market rate (because my loan is secured by the
fiber that I want in the first place.)
8) They provide me with broadband Internet at the same rate as
everyone else in the area, but instead of paying me cash, they pay
down the loan.
9) And of course, the reason they do this is so that they can sell
Internet access to everyone else between my house and their POP.
I’m getting numbers from my local ISP soon (written in February), but
the capital should be less than that needed for a new car.
Unfortunately, they never got back to me with actual numbers except to
say informally “you wouldn’t want to pay it.” I’m not sure I agree
with them, but I haven’t pressed the issue.
Oh, and the other thing about the economics is that you need something
which is 1) legal, and 2) REALLY BIG. Here’s my (as yet unpublished)
Go buy a high-def video camera, and use it to film local sports events
in their entirety. Then put that video on a file server connected to
a wifi router. Announce the game video availability on
NorthCountrySports.net. Put a snippet of the game on NCSN. People
could take their laptop to some place within range of the wifi, and
watch the game in high-def.
Assume that this is a success (which it wouldn’t be right now because
HD video cameras are way too expensive.)
At first, there would be only one wifi router. People nearly in range
would complain to us (we would encourage them to do that). We would
place a wifi router to bring them into range. And so on and so on.
Eventually we would have Potsdam covered. Then we go to SLIC and say
“Hey, you want to sell these people high speed Internet, since they
already have a broadband (if local-only) connection into their house?
We’ll only charge you a small interconnection fee.”
The next step is to convert them to fiber customers. Y’know what I
think is the correct way to do that? Blown-in fiber. Sumitomo makes
it. That way the cable hangers are just provisioning plastic tubes.
Splicing one just uses a sharp knife and plastic glue. It’s also
crucial to use a single fiber.
It’s gotta be cheap, cheap, cheap to run FTTH. Right now it’s way too
expensive, and it’s mostly the labor needed to hang or bury the cable.
The fiber itself isn’t expensive. Neither is terminating it: $50 per
Put differently, we have lots of conversations in my household about whether we should keep paying for cableTV.
We’ve never had a single conversation about whether we should keep our internet access (only which method gets us the best bang for the buck).
In essence, it’s only the fact that the cable which brings me the internets is the same cable that they push TV through that keeps us hooked up.
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